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GPhA Letter to Senate Finance Committee Chairman Grassley on pharmacy reimbursement

October 25, 2005

October 25, 2005

The Honorable Charles Grassley, Chairman
Committee on Finance
United States Senate
Washington, DC 20510

The Honorable Max Baucus, Ranking Member
Committee on Finance
United States Senate
Washington, DC 20510

Dear Mr. Chairman and Senator:

As the Senate Finance Committee searches for an alternative pharmacy reimbursement model, the Generic Pharmaceutical Association urges that the Committee to reject the current Average Manufacturer Price (AMP) based model as the basis for pharmacy reimbursement. However, should the Committee approve an AMP-based model, we strongly urge the Senate Finance Committee to include provision requiring CMS to conduct and complete a study at
least 6 months prior to implementation of this proposal in order to determine the impact on beneficiaries, pharmacies, generic utilization and the Medicaid program.

GPhA strongly believes that any pharmacy reimbursement model based on AMP would result in reimbursements to pharmacy that would be lower than acquisition costs. Such a reimbursement model could drive some pharmacies out of the Medicaid program or result in reducing access to pharmaceuticals for Medicaid patients.

GPhA believes that any model should be built on a reimbursement which is market-based, accurately reflects pharmacy costs, encourages generic drug utilization, and ensures fair and adequate reimbursement to pharmacists. Utilizing a market-based approach preserves the competitive nature of the generic marketplace that continues to provide affordable medicines for all consumers. We urge the Committee to consider market-based alternatives for pharmacy reimbursement.

Sincerely,

Kathleen Jaeger
President & CEO