NACDS Urges Clarifications, Enhancements in Two Pharmacy Reimbursement Provisions in House Healthcare Reform Le...(eneric medications. H.R. 3200 makes s...),Health

H.R. 3200 makes significant improvements to the flawed reimbursement system created by the DRA, taking steps to define average manufacturer price (AMP) in a manner that will result in a more accurate approximation of retail pharmacy's acquisition costs. The legislation also proposes using the weighted average AMP rather than the lowest AMP to set federal upper limits (FULs), a much needed improvement that takes into account the wide range of market prices for generic drugs.

We appreciate the inclusion of these key provisions in the legislation, as they will reform Medicaid pharmacy reimbursement in several critical areas. However, we strongly urge improvements in two key areas: the AMP definition, and the AMP multiplier.

We believe a crucial component of a reformed average manufacturer price-based reimbursement system is an accurately defined AMP. The AMPs currently reported to CMS by drug manufacturers do not reflect the AMP definition, the average price paid by wholesalers for drugs distributed to the retail class of trade. H.R. 3200 rightfully removes pharmacy benefit manager (PBM) rebates from the AMP definition, as these discounts are not available to retail pharmacies, and makes several other important improvements. However, additional changes to the AMP definition are needed. For example, sales of certain drugs to hospitals, physicians, and clinics remain part of the AMP definition. Clearly, these entities are not part of the retail class of trade, and inclusion of these sales skew the AMP benchmark downward. While we recognize that an AMP may need to be calculated for these sales for the purposes of rebate collection, they should not be used to set FULs for pharmacy reimbursement.

We also remain extremely concerned about the 130% multiplier in the legislation. Keeping in mind dispensing fees that reimburse pharmacies well below their costs to dispense, this multiplier will result in insufficien
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