Below is a joint statement by Steven C. Anderson, IOM, CAE, president and chief executive officer of the National Association of Chain Drug Stores (NACDS), and Bruce Roberts, R.Ph., CEO and executive vice president the National Community Pharmacists Association (NCPA) regarding the filing of a motion for preliminary injunction challenging CMS-imposed Medicaid pharmacy reimbursement reductions. In addition, an economic report is included by Stephen W. Schondelmeyer, Pharm.D., Ph.D., Head of the Department of Pharmaceutical Care & Health Systems at the College of Pharmacy at the University of Minnesota.

"As we continue to push forward in seeking a remedy to the pending Medicaid pharmacy reimbursement cuts which violate the Social Security Act, our organizations filed a motion today to request expedited review of the lawsuit filed last week, and to prevent misleading drug price information from being published on the Internet.

"In less than three months, the pending rule put forth by CMS will go into effect, resulting in drastic reimbursement cuts for retail pharmacies. The injunction seeks to obtain an expedited review of the lawsuit given the short time frame pharmacies are facing.

"The economic report by Dr. Schondelmeyer*, filed today, is further evidence of both the illegality and anticipated harm of the final CMS rule. It is worth noting that CMS has relied on Dr. Schondelmeyer's expertise and analysis previously, having hired him to prepare six reports for the agency.

"Dr. Schondelmeyer emphasizes the criticality of the impact of the imposed rule, revealing the substantial losses, and in some instances closures, that a number of retail pharmacies will face. He further cites that the retail pharmacy industry could see a loss of 10,000-12,000 pharmacies - a vast majority of which would be pharmacies in rural or inner city urban areas - over the next few years.

" We have also learned that flawed data related to this rule might be published online as early as December 2007. Dr. Schondelmeyer emphasizes the importance of blocking CMS from posting data related to the final rule on a public web site. He indicates in the report that, 'In general, transparency of price information is usually a good thing for consumers and for the market. However, when disclosed information is complex, confusing, or even inaccurate the transparency loses its value or even becomes counterproductive.' Because this data is fundamentally flawed, it would serve as a disservice to consumers and third-party payers, who may be duped into believing it may serve as a benchmark for their financial transactions.

"As frontline health care providers, Americans rely on their retail pharmacies for medications and health information. The potential loss of a large number of pharmacies nationwide impacts not only Medicaid patients, but all patients who rely on their local pharmacy for prescription and health care services.

"We cannot stress enough the importance of a remedy that will allow low-income patients to have access to their medications. We continue to move forward with our two-prong approach - both legally and legislatively - in finding a remedy to these cuts. While we are hopeful to have a success in court, it is imperative to encourage Congress to work with community pharmacy to find more appropriate and long-term cost-based models for reimbursement under Medicaid."

* Additional Findings by Dr. Schondelmeyer

Dr. Schondelmeyer's recent findings substantiate earlier reports by the Government Accountability Office (GAO) and the Department of Health and Human Services Office of the Inspector General, which warned that CMS' final rule would reimburse pharmacies well below their costs for generic drugs.

His report notes that CMS promulgated a final rule that is 'substantially inconsistent with the original statutory language, other federal and state statutory and regulatory language, the plain meaning or common usage of key terms, and the use of these key terms within the pharmaceutical industry.' He characterizes as 'overly-broad and self-styled' CMS' definition of prices to be included in the Average Manufacturer Price (AMP) calculation. To put it simply, in its zeal to cut costs, CMS strayed from the law and redefined terms with stunning liberty. To name just one of many examples, in CMS' rule, consumers and physicians are defined as either wholesalers or pharmacies.

National Association of Chain Drug Stores