A series of legal skirmishes by the Centers for Medicare & Medicaid Services and trade groups representing pharmacies - big and small alike - will apparently delay still further a proposed federal rule that would have lowered the reimbursement rates for dispensing generic drugs in Medicaid.

You may recall that a federal judge last December granted an injunction that prevented CMS from adopting the formula, which pharmacies have been arguing would have forced untold numbers of drug stores to close their doors if reimbursement rates are slashed below their costs, or drop out of Medicaid. The change would slash pharmacy reimbursements by about $8 billion over five years, according to a CMS estimate. The new formula would use AMP, or average manufacturers price, by the way.

Since then, CMS proposed an interim rule that maintained generics are available in every state, a requirement for any reduction in reimbursement to go into effect. But the National Association of Chain Drugs Stores and the National Community Pharmacists Association amended their lawsuit today to object to the interim rule. (Take a look). As a practical matter, this sets up another dogfight and will likely mean a further delay in decided the overarching issue. (The NACDS statement).

“The Bush Administration approach was to put in a disincentive for pharmacies to use generics in the medicaid program and they do that by readically reducing payments to pharmacies well below the acquistion costs to the pharmacies,” John Rector, NCPA’s general counsel, tells us. “The bottom line is that, instead of being resolved in, perhaps, November, it may now be January. It pushes everything back by months and keeps the status quo in place.”