Apr 29, 2009
Alexandria, VA — April 29, 2009 — The National Association of Chain Drug Stores (NACDS) and the Food Marketing Institute (FMI) notified the U.S. Court of Appeals for the First Circuit that the associations are appealing last month’s U.S. District Court decision to approve settlements in the First DataBank and Medi-Span lawsuit.

As a result of the District Court’s approval of the settlements, First DataBank and Medi-Span issued statements announcing that they will reduce the average wholesale prices (AWPs) to 120 percent of wholesale acquisition cost (WAC) for all drug products effective on or about September 26, 2009. First DataBank and Medi-Span also plan to stop publishing AWPs, which are used as a prescription drug pricing benchmark.

“We are hopeful that the Court of Appeals will heed our concerns and rule on the side of patients,” said NACDS President & CEO Steven C. Anderson, IOM, CAE. “Patient access to pharmacy services will be at risk if these cuts are implemented, as the AWP reductions will cut Medicaid reimbursements to pharmacies by about $68 million each year. In addition, pharmacies that are unable to renegotiate their private sector reimbursement contracts will face a four percent reduction in AWP-based reimbursement. These cuts may force some pharmacies to limit services or in some cases close their doors.”

“Not only will the District Court Order approving the settlements harm consumers, the order unconstitutionally punishes every pharmacy in the United States, despite the fact that these pharmacies were not parties to the underlying lawsuit,” said Deborah White, FMI senior vice president and chief legal officer. “Time is of the essence and we hope that the First Circuit will quickly provide relief from the District Court’s unfounded order.”

NACDS and FMI have been highly engaged in efforts to prevent implementation of these reductions. The groups filed a motion earlier this month seeking a stay in federal district court in Massachusetts following the issuance of the final judgment. The motion asks the district court to halt implementation of the approved AWP reductions that would dramatically cut pharmacy reimbursement. At present, the judge has not ruled on this motion.

NACDS and FMI previously filed a legal brief, including an economic analysis, to counter the proposed settlements. The brief and analysis detailed the numerous ways in which the proposed settlements’ cost savings and estimated impact were based on inaccurate economic analysis and would unfairly hurt retail pharmacies without helping health plans or employers.

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The National Association of Chain Drug Stores (NACDS) represents traditional drug stores, supermarkets, and mass merchants with pharmacies. Its more than 160 chain member companies include regional chains with a minimum of four stores to national companies. NACDS members also include more than 1,000 suppliers of pharmacy and front-end products, and 85 international members representing 28 countries. Chains operate 39,000 pharmacies, and employ a total of more than 2.5 million employees, including 118,000 pharmacists. They fill more than 2.5 billion prescriptions yearly, and have annual sales of over $750 billion. For more information about NACDS, visit www.NACDS.org.

Food Marketing Institute (FMI) conducts programs in public affairs, food safety, research, education and industry relations on behalf of its 1,500 member companies — food retailers and wholesalers — in the United States and around the world. FMI’s U.S. members operate approximately 26,000 retail food stores and 14,000 pharmacies. Their combined annual sales volume of $680 billion represents three-quarters of all retail food store sales in the United States. FMI’s retail membership is composed of large multi-store chains, regional firms and independent supermarkets. Its international membership includes 200 companies from more than 50 countries. FMI’s associate members include the supplier partners of its retail and wholesale members.