New CMS Document on the Medicaid Program on Covered Outpatient Drugs

Last Friday evening, CMS released the proposed rule regarding changes to averagemanufacturer price (AMP), which essentially formalizes the changes to AMP that had been previously discussed in the Affordable Care Act (ACA). Recall that the ACA had discussed changes to the methodology by which Federal Upper Limit, or FULs, which are used for the reimbursement of generic drugs under Medicaid, would be calculated relative to the methodology that had been previously proposed under the Deficit ReductionAct of 2005 (DRA). The significant changes in ACA included a shift to a no-less than-175% markup over the weighted average manufacturer price (AMP), whichis the acquisition cost by wholesale distributors for drugs for the retail class oftrade, which compares to the prior proposal of 250% of the lowest AMP underDRA (recall that FULs had previously been calculated based on a discount off AWP). While the new proposed rule has some minor clarifications,we don’t believe these should drive material changes to the new AMP prices.CMS did indicate that it recognizes that if reimbursements are too low, pharmacies may elect not to participate in Medicaid, which could potentially impact beneficiary access to pharmacy services. CMS is soliciting comments onthe proposed rule, which are due by April 2.

Its interesting reading should you want to review the ruling:  http://www.ofr.gov/OFRUpload/OFRData/2012-02014_PI.pdf

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