Injunction Suspends CMS' Generic Drug Reimbursement Rule

A judge has granted a preliminary injunction in a suit filed by pharmacy groups against the Centers for Medicare & Medicaid Services (CMS), putting the agency’s final rule on Medicaid drug reimbursement for generics on hold while reviewing the case.

The National Association of Chain Drug Stores and the National Community Pharmacists Association sued the CMS in the U.S. District Court for the District of Columbia, asking the court to declare the rule illegal and stop the CMS from posting average manufacturer price (AMP) data on its website.

The CMS issued the rule in response to data showing that Medicaid payments to pharmacies for generic drugs were too high. The rule establishes a federal upper limit (FUL) for Medicaid reimbursement for generic drugs based on 250 percent of AMP and defines how AMP is calculated. The new rule also requires manufacturers to report monthly and quarterly AMP data, which the CMS would then publish online.

The rule went into effect Oct. 1. According to a timeline on the agency’s website, the first set of FULs based on October AMP data would have been issued Dec. 30 and gone into effect Feb. 1, 2008, but the injunction has put this schedule on hold.