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Budget cutters’ favorite target would again bear brunt

BY Jim Frederick

ALEXANDRIA, Va. —The anti-pharmacy budget whackers at the Bush White House are at it again.

True to his apparent conviction that there’s no easier target for the budget axe than pharmacy, President Bush unveiled a federal budget proposal that slices another $1.1 billion from Medicaid prescription reimbursements.

Once again, the cuts fall disproportionately on pharmacies already hammered by dwindling profit margins and reimbursement cutbacks. And again, they take particular aim at lower-cost generic drugs rather than on higher-end branded medicines.

In his final year in office, the president has submitted a budget plan that would slice an estimated $1.8 billion in spending for the Medicaid program for the poor, but would increase funding for the State Children’s Health Insurance Program. Although some of the Medicaid savings would come through a cap on federal reimbursements to states to administer the program, the bulk of the projected savings would come via another attempted shakedown of community pharmacy.

Specifically, the 2009 White House budget would achieve those savings by reducing the federal upper limit for Medicaid prescription reimbursements to pharmacies, from 250 percent of the average manufacturer’s price of a generic drug to 150 percent.

Predictably, both the chain and independent retail pharmacy industries again are crying foul. “Even as pharmacies currently face drastic cuts under the Deficit Reduction Act of 2005, the president’s budget proposes cutting reimbursement by an additional $1.1 billion over five years,” stated the National Association of Chain Drug Stores.

NACDS president and chief executive officer Steve Anderson elaborated, but added an olive branch by pledging that the chain drug store industry was ready to help cut rising costs for Medicaid and Medicare. “For the third-straight year, the president’s budget calls for further cuts to a reimbursement formula that already underpays pharmacies,” Anderson said. “We are deeply troubled by these proposed cuts. However, we are eager to work with Congress and [the U.S. Department of Health and Human Services] on provisions that will increase the availability of money-saving generic medications.”

Speaking for independent drug store owners, the National Community Pharmacists Association warned that the plan to cut Medicaid “significantly limits the ability of small business owners to serve their communities and patients.

“The Government Accountability Office has already calculated that a FUL reimbursement set at a maximum 250 percent of AMP will lead to reimbursements falling 36 percent below acquisition costs,” NCPA noted. “Using a reduced 150 percent figure will likely cause reimbursement to fall more than 50 percent below the costs of the drugs themselves, without even considering the costs to dispense drugs.”

“A patient’s medical needs don’t diminish just because their community pharmacy is threatened. In underserved rural and urban communities these patients lack options other than expensive emergency rooms and doctors’ offices,” Roberts added. “The proposed savings are fictional. If adopted, the healthcare costs would actually rise because community pharmacies would not be there for their patients.

“We urge Congress to reject, as it has the last two years, this ill-advised gutting of Medicaid,” he said.

Thus far, Democrats in Congress have shown little inclination to support the White House proposals. If enacted, the spending plan would allocate roughly $515 billion to defense spending—not including $70 billion already sought by the administration to fund the wars in Iraq and Afghanistan—and push the federal debt to an estimated $5.9 billion.

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Sturken to celebrate his fifth year at Spartan by ringing NASDAQ bell

BY Michael Johnsen

GRAND RAPIDS, Mich. Spartan Stores’ chairman and chief executive officer Craig Sturken is slated to ring the NASDAQ opening bell on March 3 in celebration of his fifth anniversary leading Spartan, the company announced Thursday.

 “It is an honor to ring the opening NASDAQ bell in celebration of our fifth successful year since transforming into a consumer-centric organization and refocusing our business on our core distribution and retail operations,” Sturken stated. “We have been in the grocery business for more than 90 years and this is our eighth year as a public company, which is marked by our ability to develop and execute successful business strategies in a highly competitive market.”

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Unilever to reorganize company structure

BY Antoinette Alexander

LONDON Unilever, whose brands include Axe, Sunsilk and Dove, has announced that it is restructuring the company and combining its home and personal care segment and food segment into a single category structure.

Ralph Kugler, president of home and personal care, will step down in May at the Annual General Meetings after 29 years of service. The roles of president of home and personal care and president of foods will be merged under the leadership of Vindi Banga, currently president of foods.

To reflect the company’s focus on growth in developing markets, Central and Eastern Europe will be managed within an enlarged region comprised of Asia, Africa and Central and Eastern Europe. Western Europe will become a standalone region.

In other moves, Kees van der Graaf will retire in May from the Unilever board and from his role as president of Europe after a 32-year career with Unilever.

Harish Manwani, currently president of Asia/Africa, will lead the new expanded region. Doug Baillie will serve as president of Western Europe, having previously served as chief executive officer of Hindustan Unilever.

“These measures build naturally on the changes of recent years and give us an organizational structure even better placed to advance our growth agenda. At the same time, I want to express my deep appreciation to Kees and Ralph for the significant contribution they have made over long and distinguished years,” stated Patrick Cescau, group chief executive.

In addition, James Lawrence, currently chief financial officer, will be proposed in May for election as an executive director of Unilever. This change will mean that the Unilever board will be comprised of two executive directors and 11 non-executives.

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