PHARMACY

CMS acknowledges legal challenges in definition of multi-source drugs

BY Jim Frederick

WASHINGTON The Centers for Medicare & Medicaid Services today issued a revised definition of multiple-source drugs to be reimbursed under its new payment formula for Medicaid prescriptions, even while acknowledging it had revised that definition in response to a lawsuit filed by chain and independent pharmacy groups. The acknowledgement came as the agency released its controversial new Medicaid payment plan for generics in the face of that still-pending lawsuit.

How the agency defines multi-source medications is important, because it directly impacts how much pharmacy retailers will be paid for each generic drug they dispense to Medicaid patients under new reimbursement guidelines issued last year by CMS. The National Association of Chain Drug Stores and the National Community Pharmacists Association filed suit in federal court challenging those guidelines—which in future would base reimbursements for generics on a controversial formula derived from the average manufacturer’s price, or AMP, of the drug, as defined by CMS.

In their suit, NACDS and NCPA are seeking to overturn the new AMP-based payment plan, which Congress delayed from taking effect until October 2009. In line with that challenge, the suit also charges that the agency’s definition of multi-sourced drugs is misleading, asserting that it would usher in a “substantive” change in how generic drugs are selected and reimbursed under Medicaid, and would place “significant new burdens on pharmacies and states.”

The two pharmacy groups argued that CMS’ definition of multiple source drugs “is critical for pharmacies because CMS uses Federal Upper Limits (FULs) to cap Medicaid reimbursement to pharmacies that dispense them.”

That said, they told CMS, “the Social Security Act provides that a drug is not a multiple-source drug unless two or more equivalent drug products are ‘sold or marketed in the State;’ that is, whether particular drug products are generally available to the public through retail pharmacies in each state. CMS did not comply with this standard in revising the rule.”

In a letter earlier this year, NACDS and NCPA pointed out that the federal agency has based its rulemaking on the assumption that every multi-source drug is available in every state—when in fact some drugs may not be easily obtained by local pharmacies, raising their acquisition costs for the drug. “CMS has no factual basis for assuming national availability,” they noted angrily.

On Tuesday, CMS acknowledged as much. “NACDS and NCPA are pleased that after filing an interim final rule earlier this year … [CMS has] acknowledged serious legal concerns about the agency’s definition of ‘multiple source drug,’” NACDS and NCPA said in a jointly worded statement. “CMS acknowledges that it revised the definition in response to our lawsuit, which challenged the definition of multiple source drugs contained in the original rule July 17, 2007.

“We are reviewing the proposed revised rule to ensure that CMS will in fact comply with the Medicaid statute.  If we determine that the revised rule does not comply with the statute we may need to raise the issue with the federal court that has jurisdiction over our ongoing lawsuit.

“It is important to note that this revised rule does not eliminate the lawsuit filed by NACDS and NCPA in November of 2007 to block the average manufacturers’ price (AMP) rule, which would drastically cut reimbursement payments to community pharmacies that serve disadvantaged Americans in the Medicaid program,” added the two groups. “The December 19, 2007 injunction against the AMP rule remains in place.”

Two other problems remain in the final rules, according to NACDS president and chief executive officer Steven Anderson and NCPA executive vice president and chief executive officer Bruce Roberts. “This rule does not address two other major arguments in the lawsuit: 1) the AMP rule does not comply with the Social Security Act’s definition of AMP; and 2) the AMP rule improperly applies federal upper limits on reimbursement to non-equivalent drug products.”

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Rite Aid reports cash dividend payout for preferred stock

BY Michael Johnsen

CAMP HILL, Pa. Rite Aid on Monday declared a cash dividend of $0.4049 per share on its 5.5 percent Series I Mandatory Convertible Preferred Stock for the period commencing on Aug. 1, 2008 through Nov. 16, 2008.

The dividend is payable on Nov. 17, 2008 to shareholders of record as of Oct. 15, 2008, the company stated.

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Deciphera, Lilly partner to test compounds in treatment of cancer

BY Alaric DeArment

INDIANAPOLIS Eli Lilly and Deciphera Pharmaceuticals said Friday they would collaborate to investigate a group of Deciphera compounds as a potential cancer treatment.

 

The companies said they would investigate Deciphera’s preclinical B-Raf kinase inhibitors as cancer treatments, combining Deciphera’s drug-discovery resources and Lilly’s drug discovery, development and commercialization resources.

 

 

“This collaboration is further evidence of Lilly’s ongoing commitment to oncology research,” Lilly vice president for discovery research and clinical investigation Dr. William Chin said. “We look forward to working with Deciphera to leverage their B-Raf kinase inhibitor program, with the ultimate goal of developing promising drug candidates for cancer patients.”

 

 

As part of the deal, Lilly will obtain exclusive worldwide rights to any products developed as part of the collaboration, while Deciphera will receive an upfront payment and research funding, as well as up to $130 million in development, regulatory and sales milestone payments.

 

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