Medicaid Switch to AMP Carries Consequences

By Paul, Reid | Drug Topics, March 5, 2007 | Go to article overview

Medicaid Switch to AMP Carries Consequences


Paul, Reid, Drug Topics


The National Community Pharmacists Association is warning that implementation of a proposed rule for reimbursement for generic drugs through Medicaid may result in many pharmacies pulling out of the program or going out of business. Citing the results of a recent Government Accountability Office study and its own internal polling of members, Bruce Roberts, NCPA executive VP/CEO, warned that under the new rule patients would face a "serious danger of losing access to life-saving prescriptions. What we're faced with is not a natural disaster but a public policy disaster."

In December, the Centers for Medicare & Medicaid Services proposed a new rule that would change the Medicaid reimbursement rate for generic drugs. The rule change was mandated by the Deficit Reduction Act of 2005 and instructed CMS to set the federal upper limit (FUL) for generics at 250% of the average manufacturers price (AMP). Currently, reimbursement is tied to average wholesale price figures, but critics have complained that AWP is not transparent.

Since the rule was announced in December, pharmacists have been highly critical of many of its aspects. CMS, for example, suggested that states could increase their dispensing fees in reaction to any reduction in federal payments, but as many pharmacy industry advocates insist, states are unlikely to do so, given their own budget restraints. Another point of contention has been CMS' insistence on including any rebates in the final price determination. As Bruce Semingson, R.Ph., CEO of United Drugs, pointed out in the cooperative's comments, "This clearly benefits manufacturers and disadvantages independent pharmacies because these price reductions are not shared with independents. …

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