In a triumph for pharmacy, the Centers for Medicare and Medicaid Services (CMS) has proposed withdrawing provisions of the Medicaid average manufacturer price (AMP) rule.

Centers for Medicare and Medicaid Services, CMS, Medicaid, average manufacturer price, AMP, pharmacy, pharmacy reimbursements, National Association of Chain Drug Stores, NACDS, Steve Anderson, Douglas Hoey, National Community Pharmacists Association, NCPA, generic drug prescriptions, federal upper limits, FULs, multiple source drug, health care, health care costs, Deficit Reduction Act of 2005, Geoff Walden, RxImpact

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CMS moves to scrap its definition of AMP

September 13th, 2010

WASHINGTON – In a triumph for pharmacy, the Centers for Medicare and Medicaid Services (CMS) has proposed withdrawing provisions of the Medicaid average manufacturer price (AMP) rule.

“The move to withdraw these provisions is a victory for patient care as it is delivered in America’s pharmacies every day,” National Association of Chain Drug Stores president and chief executive officer Steve Anderson and Douglas Hoey, acting executive vice president and chief executive officer of the National Community Pharmacists Association (NCPA), said in a joint statement.

The battle over AMP-based reimbursement for Medicaid generic drug prescriptions dates to 2007, when the two organizations sued CMS over the rule. In December of that year, NACDS and NCPA won a preliminary injunction against the rule, saving the pharmacy industry $5.5 million a day since then, or more than $4.5 billion.

The latest CMS action affects the calculation of federal upper limits (FULs) and definition of “multiple source drug,” both of which relate to pharmacy reimbursements for generic Medicaid scripts, and in turn affect patient access to pharmacies.

“When we filed the lawsuit in 2007, we knew that patient care was at stake,” the statement says. “It is important to point out that the withdrawal of these provisions is another step toward reducing what would have been major cuts to pharmacy reimbursement. The end result is not an increase in reimbursement to pharmacy, but rather the lessening of cuts that previously would have involved pharmacies selling most generic drugs at a loss, thereby threatening their long-term ability to provide patient care.”

In challenging AMP, NACDS and NCPA have urged policy makers to recognize the ability of pharmacies and pharmacists to help improve outcomes and reduce health care costs.

“We are gratified that this sense is reflected in the pharmacy provisions of the new health care reform law,” the statement notes. “The new law contains provisions ranging from dramatically reducing the AMP cuts to advancing medication therapy management, through which pharmacists can help patients take their medications correctly. … We urged that patient care should not be jeopardized, but rather that pharmacy be engaged more strategically for the good of patient health and health care delivery.”

Reform includes changes to provisions in the Deficit Reduction Act of 2005 that pertain to the definition of and the method of calculating AMP. The changes, long advocated by NACDS and its pharmacy allies, are essential to achieving a better approximation of pharmacies’ costs for purchasing generic drugs, according to the association.

The law ensures that FULs are set using a multiplier of “no less than” 175% — much higher than the levels that were set under the 2005 statute, which NACDS says would have crippled pharmacy’s ability to serve Medicaid patients.

NACDS and allied organizations fought to prevent congressional negotiations from settling on a multiplier of less than 175%, and they remain committed to working through the regulatory process to maximize the multiplier to advance pro-patient, pro-pharmacy policy. The “no less than” language is vital to this effort, they say.

Redefining AMP through health care reform was among the causes advocated at NACDS’ RxImpact Day on Capitol Hill in late winter.

During the lobbying push, more than 250 NACDS members, pharmacy school students and faculty, state pharmacy association representatives and other pharmacy advocates held more than 220 meetings with elected officials.

In addition, more than 1,500 letters were sent to Capitol Hill during the “Virtual Hill Day” that supplemented the in-person meetings.

“We will continue to work with Congress and with CMS to advocate for access to pharmacy services for patients,” the joint statement concludes.