California court examines Rx price cuts

The California Courts are considering the effects of Medicaid fee reductions for pharmacists with the Ninth US Circuit Court of Appeals in San Francisco hearing arguments from pharmacists and California health officials about the potential effect of a 10% cut in fees to pharmacies by the state's Medicaid program (Medi-Cal). The cut in reimbursement levels, which some drug outlets argue leaves them both financially worse off to compound delays in recouping fees from state authorities, was due to take effect July 1. However, the court has changed its mind already on whether the State of California could make reduced reimbursements while the issue is argued in court, with the latest ruling supporting the public authority (Marketletter July 21). A federal judge is now expected to rule on whether the delay in applying the budget control measure can be extended into August.

Opponents of the cutbacks claim that a federal law is breached by the Californian action on the basis that Medicaid fees are supposed to be sufficient to maintain drug availability and "quality of care." One concern is that some pharmacies will close down while others refuse to handle Medi-Cal beneficiaries.

The California Department of Health Care Services claims that the reimbursement reduction is necessary to keep the USA's biggest state solvent. California's budget deficit is currently estimated at $17.2 billion.