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Zero Medicaid Rebate For Specialty Rx? Reform Law Puts CMS In Conundrum

This article was originally published in The Pink Sheet Daily

Executive Summary

A quirk of the health care reform law puts CMS in the position of having to figure how, or even if, it will be able to authorize the collection of Medicaid rebates on drugs not distributed via a retail pharmacy - including many cancer drugs, imaging contrast agents, and other specialty biopharma products.

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Medicare And Medicaid In Brief

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)

Medicare And Medicaid In Brief

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)

Technical Fix For Medicaid AMP Definition Would Cost Pharma Firms $2.1 Bil. Over 10 Years, CBO Says

The Senate is considering a provision to fix health care reform law language on calculating average manufacturer prices for Medicaid rebates.

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