NEW YORK, Sept 30 (Reuters) - New York, California and Washington State were sued on Wednesday by drug store groups that charged the states' Medicaid programs failed to pay them enough for providing prescription drugs.
The National Association of Chain Drug Stores, the National Community Pharmacists Association and other smaller groups said in a statement that the states had not adjusted their reimbursement rates to reflect the new 'average wholesale price' for drugs, which was set on Sept. 26.
Don Bell, a lawyer for the drug chain association, said his clients stand to lose $200 million a year because the reimbursement rates are not based on how much it costs the pharmacies to buy the drugs.
'The prices that pharmacies pay for drugs have not gone down,' he told Reuters.
Major chains whose profits could be imperiled by overly low payments include Walgreen Co, CVS Caremark Corp and Rite Aid Corp.
The three states were charged with violating the Social Security Act and failing to get the new drug prices approved as required by the Centers for Medicare & Medicaid Services.
Medicaid is the joint state-federal health program that provides health benefits for the impoverished, elderly and disabled.
'The failure to act by these states has produced a perverse outcome whereby underserved patients who need access to health care the most will get it the least,' said Bruce Roberts, the chief executive officer of the National Community Pharmacy Association in a statement.
If pharmacies are forced to drop out of Medicaid, the patients will have to turn to doctors or emergency rooms (for prescription drugs) - which will push up the cost to the public, he said.
Fights by drug chains against lower reimbursement rates and threats to quit the Medicaid program are not new.
In March, Walgreen threatened to bow out of filling Medicaid prescriptions at 44 Washington state pharmacies in protest against a rate cut and succeeded in reducing the cut in the reimbursement rate.
In June, Walgreen warned that it would pull out of Delaware's Medicaid program for similar reasons.
The National Association of Chain Drug Stores and the National Community Pharmacists Association filed a suit against Delaware, claiming the state violated federal law by ignoring the impact the reimbursement cuts will have on patient access to quality care.
In August, an agreement was reached in Delaware, with the state agreeing to some changes in reimbursement rates.
(Additional reporting by Jessica Wohl in Chicago)
(Reporting by Joan Gralla in New York; Editing by Dan Grebler) Keywords: MEDICAID STATES/ (joan.gralla@thomsonreuters.com; Tel: +1-646-223-6345) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The National Association of Chain Drug Stores, the National Community Pharmacists Association and other smaller groups said in a statement that the states had not adjusted their reimbursement rates to reflect the new 'average wholesale price' for drugs, which was set on Sept. 26.
Don Bell, a lawyer for the drug chain association, said his clients stand to lose $200 million a year because the reimbursement rates are not based on how much it costs the pharmacies to buy the drugs.
'The prices that pharmacies pay for drugs have not gone down,' he told Reuters.
Major chains whose profits could be imperiled by overly low payments include Walgreen Co, CVS Caremark Corp and Rite Aid Corp.
The three states were charged with violating the Social Security Act and failing to get the new drug prices approved as required by the Centers for Medicare & Medicaid Services.
Medicaid is the joint state-federal health program that provides health benefits for the impoverished, elderly and disabled.
'The failure to act by these states has produced a perverse outcome whereby underserved patients who need access to health care the most will get it the least,' said Bruce Roberts, the chief executive officer of the National Community Pharmacy Association in a statement.
If pharmacies are forced to drop out of Medicaid, the patients will have to turn to doctors or emergency rooms (for prescription drugs) - which will push up the cost to the public, he said.
Fights by drug chains against lower reimbursement rates and threats to quit the Medicaid program are not new.
In March, Walgreen threatened to bow out of filling Medicaid prescriptions at 44 Washington state pharmacies in protest against a rate cut and succeeded in reducing the cut in the reimbursement rate.
In June, Walgreen warned that it would pull out of Delaware's Medicaid program for similar reasons.
The National Association of Chain Drug Stores and the National Community Pharmacists Association filed a suit against Delaware, claiming the state violated federal law by ignoring the impact the reimbursement cuts will have on patient access to quality care.
In August, an agreement was reached in Delaware, with the state agreeing to some changes in reimbursement rates.
(Additional reporting by Jessica Wohl in Chicago)
(Reporting by Joan Gralla in New York; Editing by Dan Grebler) Keywords: MEDICAID STATES/ (joan.gralla@thomsonreuters.com; Tel: +1-646-223-6345) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.