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Medicare And Medicaid In Brief

Executive Summary

CMS plans AMP guidance: CMS says it will issue guidance on the definition of average manufacturer price, which is used as the basis for reimbursement of drugs in Medicaid. The definition of AMP was adjusted in the Medicaid funding bill, H.R. 1586, signed into law on Aug. 10. The AMP calculation was revised in the Patient Protection and Affordable Care Act to limit it to drugs sold through retail pharmacies, but it failed to account for specialty drugs not distributed through those pharmacies (1"The Pink Sheet" DAILY, May 17, 2010). The corrective language makes an exception to the AMP calculation for drugs that are inhaled, infused, instilled, implanted or injected and are not generally dispensed through a retail community pharmacy. A previous CBO score of the corrective language estimated that it would cost the pharmaceutical industry $2.1 billion over 10 years (2"The Pink Sheet" DAILY, June 25, 2010)

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Calculating AMP: Medicaid Proposed Rule Provides Answers, Some Detailed, Some Vague, To Manufacturers’ Questions

Manufacturers seeking answers on how to comply with the law on calculating average manufacturer price for drugs in Medicaid can turn to CMS’ proposed rule on the topic, published in the Feb. 2 Federal Register. The rule addresses a wide range of issues, including how closely manufacturers must track sales to retail community pharmacies for reporting, how to define a “retail community pharmacy,” how to define “bona fide service fees” and fair market value for them, since they can be excluded from AMP, and how to identify “5i” specialty drugs not generally dispensed at a retail community pharmacy, since they have their own special rules for calculating AMP.

AMP Rule Answers Questions On Collecting Pricing Data For “5i” Specialty Drugs Raised By Manufacturers

Manufacturers had asked CMS to explain the law pertaining to collecting average manufacturer prices for inhalation, infusion, instilled, implanted and injectable drugs “not generally dispensed through a retail community pharmacy” and how to identify such “5i” drugs.

CMS Expands Meaning Of “Retail Community Pharmacy” In AMP Rule

CMS’ proposed rule on the average manufacturer price for drugs includes specialty and home infusion pharmacies in the law’s definition of “retail community pharmacy” for the purpose of calculating AMP, citing drugs subject to Risk Evaluation and Mitigation Strategies from FDA as the reason.

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