CMS on Monday delayed for six months implementation of a proposed rule that would reduce Medicaid reimbursements to pharmacies for generic prescription drugs, Dow Jones reports (Wisenberg Brin, Dow Jones, 6/19). The rule, mandated by the Deficit Reduction Act of 2005, seeks to ensure that Medicaid can obtain prescription drug discounts similar to those obtained by private entities, such as pharmacy benefit managers.

HHS said that the rule could reduce revenue for small pharmacies "in low-income areas where there are high concentrations of Medicaid beneficiaries." Small pharmacies could "mitigate the effects" of the rule through the purchase of lower-cost prescription drugs, HHS said. The National Community Pharmacists Association and other community pharmacy groups have argued that the rule would prompt pharmacies to end participation in Medicaid (Kaiser Daily Health Policy Report, 6/15).

Pharmacies are hoping that states will make up the shortfall by increasing dispensing fees, the Pittsburgh Post-Gazette reports. Pat Epple of the Pennsylvania Pharmacists Association said that the $4 dispensing fee in Pennsylvania is not enough to cover the cost of doing business (Toland, Pittsburgh Post-Gazette, 6/19). The average dispensing fee nationwide is about $4.50.

Morgan Stanley analyst David Veal said that CMS’ six-month delay will move implementation of the rule much closer to the time that many state legislatures reconvene. As a result, the delay "potentially allow[s] lawmakers to boost dispensing fees more immediately to offset the potential reimbursement cuts," Veal said (Dow Jones, 6/19).

CMS is scheduled to publish the final rule on July 2. Drug makers in late October are to report their September AMPs, and the adjusted Medicaid reimbursement rates for generic drugs are expected to take effect Dec. 30, according to CMS (Dow Jones, 6/19).