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AMP injunction an 11th-hour victory for Rx

BY Jim Frederick

ALEXANDRIA, VA. —On the critical issue of Medicaid prescription reimbursements, the drug store industry faces the New Year with a little breathing room.

In a dramatic, 11th-hour turn of events, U.S. District Court Judge Royce Lamberth handed at least a partial victory Dec. 14 to the National Association of Chain Drug Stores and the National Community Pharmacists Association. Acting on a lawsuit filed in November by the two groups, Lamberth agreed to halt temporarily the government’s plan to impose steep Medicaid reimbursement reductions on community pharmacies.

Besides issuing an injunction just seven weeks before the new reimbursement plan was to take effect, Lamberth also ruled that the Centers for Medicare and Medicaid Services would not be permitted to post data on the Internet related to the average manufacturer price of generic pharmaceuticals.

With CMS’ new AMP-based payment plan for generics dispensed under Medicaid set to take effect Jan. 30, Lamberth’s decision was a welcome Christmas present for a beleaguered industry. Retail pharmacy operators have long asserted that the new generic reimbursement schedule would devastate many community pharmacies serving large Medicaid populations, by tying claims payments to a faulty and inaccurate formula for deriving the true acquisition cost of a generic drug.

Independents would be particularly hard-hit, NCPAnoted, with many forced many to either stop serving Medicaid patients or go out of business.

In response, NACDS and NCPA—along with many of their individual chain or independent pharmacy members—have waged a protracted battle in Congress, at the grassroots local level and within the Bush administration to scrap the plan and come up with a more equitable method of payment. In a final desperate bid to halt the new rule, the two groups filed suit Nov. 7 in the U.S. District Court for the District of Columbia against the Department of Health and Human Services and CMS. Also named in their official capacities were HHS Secretary Michael Leavitt and CMS acting administrator Kerry Weems.

Lamberth’s injunction that will prevent CMS from adopting the reduced AMP-based reimbursement formula for generics until he’s had an opportunity to fully review the new payment plan, and the merits of the suit.

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S&P revises outlook on Rite Aid

BY Michael Johnsen

NEW YORK Standard & Poor’s Ratings Services revised its outlook on chain drug retailer Rite Aid to negative from stable, the firm reported Friday. At the same time, S&P affirmed the ‘B’ corporate credit rating on Rite Aid.

“The outlook change reflects the company’s weak same-store sales and our expectation that this trend will continue over the next few quarters,” stated Standard & Poor’s credit analyst Diane Shand. Rite Aid faces a more cautious consumer, strong growth of lower-priced generics and intense competition, she said. In addition, the current environment could make it more challenging for the company to integrate its recently-acquired Brooks/Eckerd stores.

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Boston Mayor decries in-store health clinics

BY Antoinette Alexander

BOSTON On the heels of the Massachusetts Public Health Council approving regulations allowing for in-store health clinics in the state, Boston Mayor Thomas Menino is reportedly looking to ban the clinics from opening in the city.

The decision by the health council “jeopardizes patient safety,” Menino said in a written statement, according to a Boston Globe report. “Limited service medical clinics run by merchants in for-profit corporations will seriously compromise quality of care and hygiene. Allowing retailers to make money off of sick people is wrong.”

The newspaper also reported that, in a separate letter, the mayor urged members of the city’s Public Health Commission to consider banning the clinics from opening within Boston. CVS has plans to open 20 to 30 MinuteClinics in the Greater Boston area but it is unclear how many of those would be within the city’s limits.

Defending its decision to allow clinics to operate, the state Public Health Council issued a statement that read: “The members of the Public Health Council were deliberative and thoughtful in their review of the limited service clinic regulation. We believe these types of clinics, operated either as part of a retail operation or in a nonprofit setting, can provide the public access to safe, convenient, and quality care for minor health issues.”

Officials at MinuteClinic were not immediately available for comment.

On Jan. 9, the state Public Health Council approved rules for limited service medical clinics. The new regulations took effect immediately.

“This is a new model for health care delivery that can benefit many people in the Commonwealth. These regulations will improve consumer convenience and make it easier for non-profit organizations to establish satellite clinics in a variety of settings to serve vulnerable populations,” stated secretary of Health and Human Services JudyAnn Bigby in a statement issued after the approval.

Added John Auerbach, commissioner of the Department of Public Health and chair of the PHC, “Properly regulated, these types of clinics will serve an important function, making care for minor medical care more convenient. The council was mindful of not wanting to create a stand-alone system of health care, so these regulations require coordination and linkages to primary care providers.”

The approval came at the end of a long review process that included two public hearings and the submission of hundreds of pages of testimony regarding the regulations, including testimony in favor of the clinics from the Convenient Care Association.

“We appreciate the Public Health Council’s careful deliberation regarding the adopted regulations that will now guide the operation of limited services clinics in Massachusetts. These retail-based clinics are providing consumers in 35 other states with easy access to high-quality, affordable health care in the face of a nationwide primary care physician shortage. Since this growing shortage is well documented in Massachusetts, and its related health care access issues have been exacerbated by the state’s near-universal healthcare coverage, we appreciate the Council embracing limited services clinics as a partial solution to these serious problems,” said Web Golinkin, president of the CCA and chief executive officer of in-store clinic operator RediClinic, in a statement issued after the council’s decision.

Sparking the move to create specialized regulations for these clinics was CVS’ application to open a MinuteClinic in one of its stores in Weymouth. According to the council, early in the application review process it became clear that DPH regulations governing medical clinics did not address the operation of medical clinics with limited scope of services. Rather than consider applications requiring numerous waivers from full-service clinic regulations, the department decided to create a specialized set of rules.

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