Mississippi pharmacists foil Medicaid rule on generic drugs

June 27, 2008

A court rules that Mississippi was wrong in issuing a final rule that would have curtailed reimbursement to pharmacists for generic drugs.

Mississippi pharmacists are rejoicing over a court decision that reverses a final rule from the state Medicaid agency that would have implemented a reimbursement rate for generic drugs that is similar to average manufacturers price. The Division of Medicaid had come up with a new state maximum allowable cost (SMAC) rate as an alternative definition for estimated acquisition cost (EAC) for multi-source drugs. The chancery court of the first judicial district ruled that the SMAC rate is not a true definition of EAC and instead is a cost-containment measure designed to reduce annual Medicaid expenditures for certain drugs by $7.8 million. The court added that Medicaid attempted to use a legislative loophole to create a rule that is otherwise outside the scope of its authority. The court therefore set aside the Medicaid rule. Asked to comment on the decision, John Rector, general counsel for NCPA, which was a plaintiff in the suit along with the Mississippi Pharmacists Association and others, said, this state ruling is not likely to have a bearing on the larger, federal case dealing with AMP, but it may be a deterrent to other states that inappropriately attempt to implement AMP.

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