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.
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Lilly revealed that the US Department of Justice is investigating how it treats distribution service agreements with wholesalers when reporting average manufacturer price to CMS – one of the topics that is supposed to be addressed in the yet-unpublished final AMP rule. The government is also looking into contracting and pricing of Merck's Dulera.
A major regulation that could reshape how the pharmaceutical industry reports drug pricing to the government and pays rebates on Medicaid drugs is slated to be released in final form in 2014. Some Medicaid regulatory experts suggest that CMS could make changes in the final rule that will make it less disruptive to manufacturers’ businesses than they have feared.
“Bona Fide Service Fees” Lawsuit Underscores Need For Care In Distributor Contracts, Medicaid AMP Calculations
Litigation being pursued by former drug wholesale association exec alleges that manufacturers inappropriately classed bona fide service fees as discounts, causing them to report inaccurate average manufacturer prices to CMS.