DHH alters plan to reduce drug costs
The state health agency has revised its plan to reduce Medicaid prescription drug program costs in response to complaints from Louisiana’s community pharmacists that the changes would put many of them out of business.
The pharmacists and their legislative supporters have expressed strong opposition in public hearings and private meetings since the new reimbursement rules went into effect the first week of September.
They claimed that cuts associated with the changes would yield far more than the $32.5 million Medicaid budget savings projected.
A Louisiana Independent Pharmacies Association survey released last week showed that instead of the 3 percent savings DHH had said it was after, the change actually translates into greater than an 18 percent reduction to pharmacies’ bottom line.
Department of Health and Hospitals Secretary Bruce Greenstein said the current reimbursement rules will be gone effective Nov. 1 — replaced with those under which pharmacies and the health agency can work.
“It will still get us to where we need to go as far as savings,” Greenstein said in an interview after the new rules were made public. “We expect that this will keep our pharmacies in business.”
Greenstein said the plan has some of the features of one operating in Alabama.
LIPA president Randal Johnson did not return three telephone messages seeking comment. Johnson issued a statement which said in part, “We appreciate the willingness of DHH to continue to review the information and work toward a fair and transparent reimbursement methodology.”
DHH has been reimbursing for the average acquisition cost plus $10.13 per prescription. The independent pharmacists said they have to pay far more than the average cost that DHH has affixed to the drugs included in the program.
The pharmacists said officials relied on bad information from their financial advisers in setting the policy as well as average acquisition costs of drugs.
They said special circumstances that exist with independent or community pharmacies have not been taken into account.
The new reimbursement rules provide for a markup of 10 percent on the average acquisition cost for generic drugs and 1 percent markup for brand name generics. The dispensing fee paid will increase from $10.13 to $10.51 per prescription to cover more costs.
In addition, certain classes of specialty drugs which are more expensive and complex to stock and dispense than mass-market prescription drugs will be reimbursed on the higher average wholesale cost price plus 5 percent.
Under the change, the health agency will closely monitor drug-pricing updates that manufacturers make and pass those along to pharmacists.
That, DHH said, will allow pricing to be updated more quickly where pharmacy reimbursement is lower than cost of acquisition.
Greenstein said the pharmacists submitted real time data to underscore their point that the new reimbursement methodology would be costly to their businesses.
“We really made sure we were getting a pretty clear picture. It took us a while. And it took independents (pharmacists) a while to develop their proposal to us,” Greenstein said. “We are very happy with it.”