The National Association of Chain Drug Stores is applauding a proposed rule by the Centers for Medicare & Medicaid Services (CMS) that would withdraw two components of a contested 2007 rule that were related to pharmacy reimbursement for Medicaid.


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CMS’ new take on AMP rule assessed by NACDS

October 25th, 2010

ALEXANDRIA, Va. – The National Association of Chain Drug Stores is applauding a proposed rule by the Centers for Medicare & Medicaid Services (CMS) that would withdraw two components of a contested 2007 rule that were related to pharmacy reimbursement for Medicaid.

That rule has been blocked by an injunction in the aftermath of a lawsuit brought by NACDS and the National Community Pharmacists Association (NCPA).

In the comments to CMS, NACDS praises the agency for issuing the newly proposed rule, which relates to the definition of average manufacturer price (AMP) and the calculation of federal upper limits (FULs) for multiple-source drugs.

“NACDS strongly believes the final rule was fundamentally flawed and [that it] implemented the Medicaid pharmacy reimbursement provisions of the Deficit Reduction Act of 2005 in a manner that was inconsistent with congressional intent,” says a letter that NACDS submitted to CMS.

NACDS and NCPA challenged the original final rule in federal court in the District of Columbia in 2007 and won an injunction that prohibited the implementation of the AMP rule. That injunction has subsequently prevented an estimated $5.5 billion in Medicaid reimbursement cuts to pharmacies nationwide.

“We are committed to working with CMS on implementing regulations pertaining to the Medicaid pharmacy reimbursement provisions of the Patient Protection and Affordable Care Act [PPACA] as amended by the Health Care and Education Reconciliation Act and the FAA Air Transportation Modernization and Safety Act. We offer these comments in the hopes of establishing a strong, collaborative partnership with the agency and the implementation of a Medicaid pharmacy reimbursement policy for multiple-source drugs that maintains the strong link between community pharmacies and Medicaid patients,” NACDS states in the letter.

The association calls for CMS to issue a new rule that defines “retail community pharmacy” to accurately implement PPACA’s definition of retail community pharmacy.

“For example, in the AMP final rule, ‘retail pharmacy’ was defined to include mail order pharmacies,” NACDS explains. “Inclusion of mail order pharmacies would result in the inclusion of sales and rebates not available to retail pharmacies. It is also inconsistent with the definition of retail pharmacy in other programs, such as the Medicare Part D program, which defines retail pharmacy as ‘any licensed pharmacy that is not a mail order pharmacy from which Part D enrollees could purchase a covered Part D drug without being required to receive medical services from a provider or institution affiliated with that pharmacy.’ ”

NACDS also urges CMS to redefine the terms “average manufacturer price” and “wholesaler” to ensure that implementation of the rule’s provisions is consistent with congressional intent as set forth in PPACA.

What’s more, the association calls for the agency to create future rule-making procedures that would make the FUL for a multiple-source drug no less than 175% of the weighted AMP, based on national sales utilization for all equivalent multiple-source drug products.

The “no less than 175%” language of PPACA, according to NACDS, provides clear authorization to CMS to employ a higher multiplier to determine FULs in all cases or in specific instances. The association maintains that this distinction is critical to ensuring that retail pharmacies will not be reimbursed at a level that is below their costs to purchase prescription drugs.

In its comments, NACDS also expresses support for the withdrawal of the Multiple Source Drug rule, which was issued in 2008 to ensure consistency with PPACA.

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