Medicaid Average Manufacturer Price (AMP)

HDMA’s Position:
HDMA believes that AMP-based reimbursement, as currently defined by the Centers for Medicare and Medicaid Services (CMS), should be revised to ensure that Medicaid reimbursement to retail pharmacies is fair and accurate for generic medicines dispensed to Medicaid patients. HDMA supports efforts to ensure that AMP-based reimbursement is implemented in accordance with Congressional intent and encourages Congress to take action to clarify the definition of AMP.

Issue:
The Deficit Reduction Act of 2005 (DRA) made statutory changes to the methodology for setting the Federal Upper Limit (FUL) for multisource drugs. CMS interpreted the DRA as requiring the "new" FUL to be set at 250 percent of the lowest AMP. 

Pharmacies and distributors are concerned that both the DRA and the subsequent CMS final rules on how to calculate AMP do not appropriately reflect prices available to retail pharmacies. Although not directly reimbursed by Medicaid, HDMA’s primary, full-service distributor members provide prescription medicines and healthcare products to tens of thousands of community retail pharmacies across the nation. Community retail pharmacies are often the only healthcare providers in urban and rural areas, providing essential patient access to prescription medicines. These pharmacies must be appropriately reimbursed in order to continue providing medications to Medicaid patients.

Additional Information:
HDMA believes that CMS should clarify the definition of AMP in order to accurately represent the market price available to the retail pharmacy class of trade. This clarification needs to address sales to entities such as pharmacy benefit managers (PBMs), mail-order pharmacies, hospital inpatient pharmacies and sales made to physician offices from the calculation of AMP. HDMA believes these entities do not qualify under the definition of retail pharmacy class of trade and agrees with CMS that a member of this class of trade is an entity that must provide public access.

HDMA also believes that the most effective way to ensure that FULs are determined on the basis of product available to a significant portion of the market is to use the weighted average AMP of the therapeutically equivalent products available in the market, rather than the AMP of the least costly product. This is particularly necessary in the generics marketplace, where product availability and pricing can vary widely at any given time.

About HDMA
HDMA is the national association representing primary healthcare distributors, the vital link in the healthcare system. Each business day, HDMA member companies ensure that more than nine million prescription medicines and healthcare products are safely delivered to more than 165,000 pharmacies, hospitals, nursing homes, physician offices, clinics and others nationwide. HDMA and its members work daily to provide value and contain costs, saving the nation's healthcare system an estimated $32 billion per year.