Pharmacies, drugstores object to Medicaid price transparency effort

The pharmacy and drugstore lobbies are strongly objecting to a new effort by the federal government to gather more data on drug prices in the Medicaid program.

The groups say the Centers for Medicare and Medicaid Services (CMS) exceeded its legal authority when it recently put out a request for proposal requiring a "nationwide survey of consumer purchase prices" for drugs at retail pharmacies that participate in Medicaid. 

"CMS does not have the authority to post individual (retail survey prices), and is only authorized by (the health reform law) to post an 'average retail survey price'," the groups write in a letter sent Friday to Cindy Mann, director of the CMS Center for Medicaid, CHIP and Survey & Certification. The letter, obtained by The Hill, is signed by the American Pharmacists Association, the National Association of Chain Drug Stores, the National Community Pharmacists Association and the Food Marketing Institute.

"Furthermore," the letter continues, "we are greatly troubled by (a requirement in the request for proposal) which asks a contractor to collect and disclose wholesale prices that pharmacies pay to purchase drugs. We have identified no legal authority for CMS to collect and distribute pharmacy acquisition data."

The groups argue that posting such data for all to see can be easily misinterpreted, for example if consumers can't tell whether it includes costs borne by the pharmacies for dispensing the drugs.  

The letter closes by saying the signees are "committed to working with" CMS on the issue, but their objections immediately drew hackles from the companies that manage prescription drug benefits. Under pressure to reveal their own prices, pharmacy benefit managers are taking gleeful solace now that drugstores are being asked to do the same. 

"We can’t have a double standard in which drugstores are shielded from the same type of transparency they routinely demand of (Pharmacy Benefit Managers)," said Pharmaceutical Care Management Association President and CEO Mark Merritt. "This is especially true of the independent drugstore lobby, which has for years demanded more 'transparency' of others in the pharmacy supply chain. Now, they have an opportunity to provide more of it themselves."

Legislation introduced by Rep. Anthony Weiner (D-N.Y.) and supported by drugstores would require pharmacy benefit managers to report their payments to pharmacies along with payments they receive from health plans and drug manufacturers. The benefit managers say that would make it impossible for them to play pharmacies off of one another, and lead to higher prices for customers.

"Regardless of the substance of CMS’ request, independent drugstores have only themselves to thank for bringing this upon the retail pharmacy community," Merritt said. "Since independent drugstores are now the least transparent part of the pharmacy supply chain, it should be no surprise that their own decade-long campaign for ‘transparency’ has finally come full circle."