CMS recently launched part II of its new Survey of Retail Prices to generate the latest national benchmark that may be used for Medicaid reimbursement to pharmacies. On June 1, CMS, through contractor Myers and Stauffer LC, began a monthly survey of 2,000 to 2,500 randomly selected community pharmacies— including both independents and chains, but not mail-order or specialty for now. This part of the Survey of Retail Prices will generate a public National Average Drug Acquisition Cost (NADAC) pricing file that state Medicaid agencies can use to compare with their own pricing methodologies and payments. The NADAC prices will be updated at least monthly. While part II focuses on the acquisition costs of covered outpatient drugs purchased by community pharmacies, it doesn’t address a dispensing fee. Part I, which is not yet implemented, will focus on customer prices for those drugs. The voluntary two-part survey is intended to provide information to help states ensure that their outpatient drug purchasing is “efficient,” CMS wrote in a May 31 informational bulletin announcing the launch. “If there are projected savings associated with moving to this benchmark, then logic would tell you that means pharmacy reimbursement will most likely be a net negative number,” said Rebecca P. Snead, BSPharm, Executive Vice President & CEO, National Alliance of State Pharmacy Associations. States reimburse pharmacies for Med- icaid-covered outpatient drugs based on the ingredient cost of a drug and a “reasonable” dispensing fee, CMS wrote in a proposed rule related to the Medicaid prescription drug program that was published February 2. “CMS has said that if any state uses this [NADAC] file, they’re going to require them to evaluate their dispensing fee, which to us is pretty weak language,” said John Coster, BSPharm, PhD, Senior Vice President of Government Affairs for the National Community Pharmacists Association. “We think they should be requiring states that use this file to increase their dispensing fee,” following the lead of Alabama and Oregon. The use of NADAC should be “inextricably linked to a companion adjustment in the dispensing fee,” Snead said. “It is reasonable to predict that if a state moves to a new acquisition cost benchmark without appropriately adjusting and paying an adequate dispensing fee, that there will be … limited ability for pharmacies to participate in the Medicaid program, because when you are reimbursed below what it costs you to provide patient care services, you don’t stay in business very long.” Historically, payers have provided a higher reimbursement than pharmacy cost on the product side, but lower reimbursement than pharmacy dispensing cost. “At the end of the day, we can argue all we want about whether you’re paying too much on the product or too little on the dispensing fee,” Coster said. “If the pharmacy can’t earn some return on the cost of the drug and the dispensing of the prescription, then they’re going to go out of business, especially if they do a lot of Medicaid.” According to a July 2011 report by the U.S. Department of Health & Human Services Office of Inspector General (OIG), Replacing Average Wholesale Price [AWP]: Medicaid Drug Payment Policy, OIG found that a majority of the 50 states and Washington, DC, wanted CMS to come up with a new national benchmark to set reimbursement. Referring to the “fundamentally flawed nature of AWP-based reimbursement” and the “inflated published prices” that cause Medicaid to “pay too much for certain drugs,” the OIG report recommended that CMS develop a national benchmark that accurately estimates acquisition cost and encourage states to consider it when determining Med- icaid reimbursement for prescription drugs. Hence, the CMS-commissioned survey. “CMS is pleased to have begun our monthly survey of pharmacy acquisition costs to give states further information to consider to ensure their Medicaid outpatient drug pricing, as well as their dispensing fees, is fair and efficient,” CMS spokesperson Alper Ozinal said in an e-mail statement. “The survey is voluntary and we appreciate the pharmacies’ assistance. The survey is designed to be easy for pharmacy staff to complete.” Snead noted, however, that “the jury’s still out as to whether pharmacies choose to participate.” “We’re very concerned about where CMS is going,” Coster said. “They don’t seem to have any type of plan here to [ensure] adequate reimbursement to pharmacies. And the lack of clarity around what the states have to do with the dispensing fee is an example of that.”