Kerr Drug

Kerr Drug CEO Calls on Congress to Fix Critical Flaws in CMS Rule on Medicaid Prescription Drug Reimbursement

Washington, DC, July 20, 2007 --( Wednesday, Chairman, President and CEO of Kerr Drug, Inc., Anthony Civello, National Association of Chain Drugs Stores (NACDS) past Chairman of the Board appeared before the U.S. House of Representatives Committee on Small Business. Testifying on behalf of community chain pharmacy, Civello discussed serious concerns with the final rule issued by the Centers for Medicare & Medicaid Services (CMS) on the Medicaid Prescription Drug Reimbursement.*

The rule establishes guidelines by which average manufacturer price, or AMP, will be used in the calculation of Medicaid payments to pharmacies for “multiple source” (primarily generic) prescription medications. These rules were promulgated by CMS to implement pharmacy reimbursement provisions included in the Deficit Reduction Act of 2005 (DRA).

“The CMS rule is simply unacceptable for community pharmacy and the Medicaid patients they serve,” said Civello, whose company operates 102 pharmacies in North and South Carolina.

Among the concerns that Civello articulated included defining and calculating the AMP. The final rule contradicts the DRA by including many sales and transactions that do not reflect prices paid by wholesalers for drugs distributed to retail pharmacies. Also, the rule errs in requiring manufacturers to include all transactions in the calculation of AMP, except for those sales and rebates that can be adequately documented as being excluded under the rule, while providing no adequate assurance that this determination will be executed properly.

“The regulatory process has failed to reach an outcome that is fair and reasonable for community pharmacies. It places a severe economic burden on many smaller pharmacies, both chain-operated and independent. We believe that Congress needs to act now to provide a legislative fix that reduces the economic burden on community pharmacies, thereby preserving the broad access to pharmacy services that Medicaid beneficiaries currently enjoy,” said Civello in his statement.

Specifically, Civello offered several legislative “fixes” to remedy the current problem, including creating a more accurate definition of AMP, modifying the basis of generic drug reimbursement, and providing for more accurate pharmacy dispensing fees.

“NACDS urges Congress to revisit the Deficit Reduction Act of 2005 and repeal or reduce the reductions targeted for payments for generic drugs,” Civello summarized. “We recognize that other ideas might work as well, and look forward to working with Congress and the rest of the industry to develop solutions that ensure continued access to drugs for Medicaid beneficiaries and fair compensation for community pharmacies.”


About Kerr Drug
Kerr Drug is one of the most recognized and respected names in the chain drug industry. With its roots in the Carolinas and headquarters in Raleigh, Kerr Drug is taking the vision of community pharmacy farther than any other drug chain. The company has placed its future on its unique ability to provide patients, the medical community, and health plan sponsors, access to the most comprehensive and convenient health and wellness offering in the industry. With a mission to be the most comprehensive provider of pharmacy and related health care services, while continuing to be the most reliable provider of health related and convenience items, Kerr is currently providing services that far exceed the traditional drug store mix. For more information, please visit

About The National Association of Chain Drug Stores (NACDS)
The National Association of Chain Drug Stores (NACDS) represents the nation's leading retail chain pharmacies and suppliers, helping them better meet the changing needs of their patients and customers. Chain pharmacies operate more than 38,000 pharmacies, employ 114,000 pharmacists, fill more than 2.3 billion prescriptions yearly, and have annual sales of nearly $700 billion. Other members include almost 1,000 suppliers of products and services to the chain drug industry. NACDS international membership has grown to include 87 members from 28 countries. For more information about NACDS, visit
Chrissy Shott
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