Pharmacists Expressing Concern With Medi-Cal Reimbursement Cuts

California pharmacists say the recently approved 10% reduction to reimbursements for Medi-Cal beneficiaries' prescriptions could diminish profits and make it harder for beneficiaries to fill prescriptions, the Riverside Press-Enterprise reports. Medi-Cal is California's Medicaid program.


In October, the state Department of Health Care Services received federal approval to cut by 10% the amount it reimburses pharmacies and a number of other health care providers. The cuts are retroactive to June 1 and are aimed at reducing Medi-Cal spending by $623 million.

The cuts would not affect how much beneficiaries pay for their prescriptions (Pierceall, Riverside Press-Enterprise, 12/2).

Several professional medical organizations, including the California Hospital Association and the California Medical Association, have filed lawsuits challenging the Medi-Cal reimbursement cuts (California Healthline, 11/30).

How Pharmacists Could Be Affected

Pharmacists usually purchase drugs from wholesalers at a discounted rate. When that drug is used to fill a Medi-Cal beneficiary's prescription, the state covers the average cost of the wholesale price and pays a fee to the pharmacist.

According to the Press-Enterprise, the state generally requires brand-name drugs for Medi-Cal prescriptions. Norman Williams -- a spokesperson for DHCS -- said that Medi-Cal receives rebates for using brand-name drugs, but not for generic drugs, and that it would cost the state more if it covered generic medications.

Pharmacists now are wondering how much they will have to pay back to the state if the retroactive cuts take place as planned.

Don MacKellar, owner of Perris Hills Pharmacy in Perris, said the cuts could put his pharmacy out of business. He said he is not filling any new Medi-Cal prescriptions for brand-name medications because of the possibility that he would owe more money to the state (Riverside Press-Enterprise, 12/2).

James Roache PharmD
CORRECTION TO ABOVE: The rebate for Generic Drugs is much less than for Brand Name Drugs. It is a base rate of 11% of AMP, with no additional rebate. 42 U.S.C. § 1396r-8(c)(3). In contrast, the total rebates due for Brand Name Drugs have typically been within a couple of points of 31% of AMP, a difference of roughly twenty (20) percent. Perhaps Mr. Williams might wish to expand his view as expressed in the Press Telegram whereby he informs us that the State does not receive manufacturer rebates for generic drugs. According to 42 U.S.C. § 1396r-8(c)(3) the State does receive significant rebates on generics.
James Roache PharmD
According to, non-innovator drugs (generics) are rebated to Medicaid at the rate of 13%.

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