August 25, 2014 Morayea Pindziak

As We Wait for the Final AMP Rule…

The AMP rule for implementing the Medicaid prescription drug provisions of the Patient Protection and Affordable Care Act (PPACA) was published by CMS on January 27, 2012. Guidelines with a wide-reaching financial impact on the life science industry were expected to create serious administrative and operational challenges needing to be addressed quickly. The goal of this rule was to lower costs for states and taxpayers by the following:

  • Aligning reimbursement rates to better reflect the actual price the pharmacy pays for the drug
  • By increasing rebates paid by drug manufacturers that participate in Medicaid
  • By providing rebates for drugs dispensed to individuals enrolled in a Medicaid managed care organization

Keeping these goals in mind, manufacturers were suggested to focus on major items in this rule that would ultimately change the way they do business.

  • U.S territories would be included in the AMP calculations.
  • Rebate agreements would include prescriptions paid by Medicaid managed care, as well as Fee-for-Service. This would require Medicaid managed care plans to capture utilization data and provide it to the states, and would only exempt prescriptions dispensed by a health maintenance organization (HMO.
  • OTC drugs would need to be considered covered drugs if they have a National Drug Code (NDC)
  • The Inclusion of sales to wholesales would be prohibited, unless a manufacturer has documented evidence that the drugs sold to the wholesalers were distributed to retail community pharmacies.
  • Specialty pharmacies and home healthcare distributors would be included within the definition of “retail community pharmacies”.
  • Manufacturers would be required to exclude from AMP rebates paid to insurers, but not the underlying sales to the pharmacies.
  • Best Price would be redefined to include discount and rebates “associated” with the sale of a drug to a customer, rather than the price available to that customer.
  • Inclusion of direct sales of an AG labeled drug to a manufacturer or distributor selling under its own NDC in AMP of the brand.

Two years later, Pharmaceutical manufacturers are still eagerly awaiting the release of the AMP Finale Rule. Some changes will require significant change across all aspects of the regulated pricing environment including policies, procedures, methodology, systems, and data. The final rule may include new provisions or nuances to proposed provisions that will not be known until the final release.

Going forward, performing gap and readiness assessments will help to identify the aspects of proposed or final regulations that apply to your business and the areas of your organization and infrastructure that will be impacted by the legislation. Preparing a plan outlining changes by business unit to each component of your GP infrastructure with aid in discovering the necessary resources needed to implement required changes and associated costs, and an overall project timeline identifying key work streams, contingencies, and project milestones. Along with this, it would be wise to assess implementation costs and potential changes to regulated reimbursement resulting from changes in regulation.

For more information: https://www.alscg.com/expertise/contract-strategy-operations-and-compliance/government-pricing

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