NCPA Testifies Before House Small Business Committee

Main Category: Medicare / Medicaid / SCHIP
Article Date: 07 Dec 2007 - 2:00 PDT

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Charles Sewell, National Community Pharmacists Association (NCPA) senior vice president, Government Affairs, testified yesterday before the U.S. House Small Business Committee. The hearing focused on strengthening the Regulatory Flexibility Act (RFA), which requires government agencies to examine and report on the impact of new regulations upon small businesses when they issue proposed rules. Sewell supported the need for a legislative fix after witnessing the Centers for Medicare & Medicaid Services' (CMS) failure to explore the ramifications its Medicaid generic prescription drug reimbursement regulations will have on the 23,000 small business independent pharmacies that NCPA represents.

"CMS' half-hearted attempt to follow the Regulatory Flexibility Act is going to spawn a financial crisis for independent pharmacies and a health crisis for their patients," said Sewell. "Simply put, CMS was derelict in its duty by not conducting a thorough economic study of its proposed or final regulations for Medicaid generic drug reimbursement. Putting more teeth into this law will ensure small businesses are not an afterthought when creating regulations."

CMS' Medicaid generic drug reimbursement regulation is based on its Average Manufacturer Price (AMP) definition that does not accurately reflect retail acquisition costs. In fact, a Government Accountability Office (GAO) study determined that independent pharmacies would average reimbursements 36 percent below their cost under CMS' regulation. CMS did not conduct a similar study.

CMS will fully implement its AMP rule on January 30, 2008. At that time independent pharmacies, which are often located in underserved rural and urban communities, will be forced to make the business decision to either limit or drop out of Medicaid, or even go out of business. Their patients, with their access to prescription drug services curtailed, will have to explore other, more expensive health care options such as emergency room visits.

NCPA is pursuing a variety of legal and legislative remedies to delay or change CMS' AMP regulation. In Sewell's testimony he offered several recommendations for how the RFA could be improved in the future for other small businesses.

"An agency should not issue a final regulation unless it specifically analyzes the significant impact that rule will have on small businesses," said Sewell. "Agencies would no longer be able to hide behind the excuse of having a lack of evidence. In order to proceed, they would have to find that there is no adverse impact. If studies exist showing the rule will significantly impact small businesses (defined as a loss of 3 percent or more of gross revenue), the agency cannot simply dismiss them and proceed with implementation, nor can the agency act if it has not found any relevant data. Finally, a mechanism would be in place for a person or entity to issue a regulatory challenge of any agency that releases a final rule that it believes violate the RFA."

If all of these recommendations are adopted, it is unlikely the situation currently jeopardizing patient access and confronting community pharmacies would have transpired.

To view Sewell's entire testimony go here

The National Community Pharmacists Association, founded in 1898, represents the nation's community pharmacists, including the owners of more than 23,000 pharmacies. The nation's independent pharmacies, independent pharmacy franchises, and independent chains dispense nearly half of the nation's retail prescription medicines.

National Community Pharmacists Association