The Centers for Medicare and Medicaid Services (CMS) has proposed withdrawing provisions of the Medicaid average manufacturer price (AMP) rule, a move that retail pharmacy groups called a triumph in their long-running fight over reimbursement.

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Rx claims victory as CMS proposes to redefine AMP

September 3rd, 2010

WASHINGTON – The Centers for Medicare and Medicaid Services (CMS) has proposed withdrawing provisions of the Medicaid average manufacturer price (AMP) rule, a move that retail pharmacy groups called a triumph in their long-running fight over reimbursement.

The National Association of Chain Drug Stores and the National Community Pharmacists Association announced the CMS proposal in a joint statement on Friday.

"The move to withdraw these provisions is a victory for patient care as it is delivered in America’s pharmacies every day," stated NACDS president and chief executive officer Steve Anderson and NCPA acting executive vice president and CEO Douglas Hoey.

The battle over AMP-based reimbursement for generic Medicaid 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 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 NACDS and NCPA statement said. "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 the AMP rule, 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 noted. "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," the pharmacy groups added.

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 said 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 pointed out.

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

NACDS and NCPA got a boost in the AMP debate earlier this year.

In January, the associations announced that a study by the Government Accountability Office (GAO), undertaken at the request of Sen. Charles Grassley (R., Iowa), supported their argument that reimbursement rates mandated by the Deficit Reduction Act of 2005 would be less than the cost of the drugs to pharmacies in many cases.

And about a month earlier, NACDS and NCPA said 16 members of Congress sent a letter to House Speaker Nancy Pelosi to consider a higher FUL for reimbursing pharmacies for dispensing generic prescription drugs under Medicaid.