Jun 8, 2009
Alexandria, Va. – June 8, 2009 – Today the National Association of Chain Drug Stores (NACDS) and the Food Marketing Institute (FMI) filed their principal legal brief with the U.S. Court of Appeals for the First Circuit, challenging the First DataBank and Medi-Span settlements that reduce average wholesale prices (AWPs). NACDS and FMI were joined in the brief by pharmacies that will be harmed by the AWP reductions. The implementation of the AWP cuts would dramatically cut reimbursement for many pharmacies. The appeal brief filed today argues that it is inappropriate to harm pharmacies that were not defendants on the original lawsuit because they did nothing wrong.


The Court of Appeals granted a motion to expedite the schedule for the appeal, which means the Court may be able to issue a decision on the NACDS-FMI appeal before the cuts occur on September 26.


“Patient access to pharmacy is at risk if the pending settlements are implemented as they will cut Medicaid reimbursement rates for many pharmacies to devastating levels,” said NACDS President and CEO Steven C. Anderson, IOM, CAE. “Patient access should not be compromised. In filing the appeal, we urge that the Court not penalize pharmacies but instead rule on the side of patients.”


“The District Court's approval of a judicial settlement that unconstitutionally punishes every pharmacy in the country was an egregious error,” said Deborah White, FMI senior vice president and chief legal officer. “We are pleased that the First Circuit Court granted our motion to consider this matter quickly and we encourage the First Circuit to overturn the District Court's order.”


Moving forward, First DataBank, Medi-Span and the class action attorneys are scheduled to file opposing briefs on June 29. NACDS and FMI will then file a reply brief on July 13. The court is scheduled to hold a hearing with oral arguments during the week of July 27.


In April, NACDS and FMI filed a motion seeking a stay to halt implementation of the AWP reductions. Previously, both groups also 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 settlement’s cost savings and estimated impact were based on inaccurate economic analysis and would unfairly hurt retail pharmacies.

The AWP reductions will cut Medicaid reimbursement by about $68 million each year. In addition, pharmacies that are unable to renegotiate their private sector reimbursement contracts will face a net four percent reduction in AWP-based reimbursement.


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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.