The National Association of Chain Drug Stores and National Community Pharmacists Association have declared victory with the issuance of a final rule by the Centers for Medicare & Medicaid Services (CMS) that withdraws provisions of the Medicaid pharmacy reimbursement formula under the average manufacturer price (AMP) model.


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Victory for Rx: CMS withdraws AMP rule provisions

November 12th, 2010

ALEXANDRIA, Va. – The National Association of Chain Drug Stores and National Community Pharmacists Association have declared victory with the issuance of a final rule by the Centers for Medicare & Medicaid Services (CMS) that withdraws provisions of the Medicaid pharmacy reimbursement formula under the average manufacturer price (AMP) model.

NACDS and NCPA said Friday the CMS final rule removes provisions that define AMP, determine the calculation of federal upper limits (FULs) and define a "multiple-source drug." Those provisions relate to the reimbursement to pharmacies for generic Medicaid prescriptions and, in turn, affect patient access to pharmacies, the associations noted.

With the action, CMS is pulling provisions of a July 2007 rule that has been blocked by an injunction after a lawsuit brought by NACDS and NCPA. The agency had proposed the rule change in September, which drew comment from NACDS last month.

"The Centers for Medicare & Medicaid Services move to withdraw provisions of the Medicaid pharmacy reimbursement formula under the average manufacturer model is a victory for patients and pharmacy," NACDS president and chief executive officer Steve Anderson and NCPA executive vice president and CEO Kathleen Jaeger said in a joint statement.

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. The injunction has subsequently prevented an estimated $5.5 billion in Medicaid reimbursement cuts to pharmacies nationwide.

"When we filed the lawsuit in 2007, we knew that patient care was at stake. 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," Anderson and Jaeger noted in their statement. "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 and access."

The executives added that NACDS and NCPA "insisted that this policy was not appropriate" and have called on policymakers to recognize the vital role of community pharmacies and pharmacists to help improve health care outcomes and in turn reduce medical costs. 

"We are gratified that this sense is reflected in the pharmacy provisions of the new health care reform law," Anderson and Jaeger stated. "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, which is referred to as 'medication adherence.' The costs related to poor medication adherence have been estimated to reach $290 billion annually, or 13% of all health care expenditures. We urged that patient care should not be jeopardized, but rather that pharmacy be engaged more strategically for the good of patient health and healthcare delivery."

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