CMS needs fair definition of AMP

WHAT IT MEANS AND WHY IT'S IMPORTANT — When CMS withdrew its proposed AMP rule about a year ago, it should have included the sections pertaining to how federal upper limits were calculated — that is, assuming you are using AMP to come up with those FULs. That's a pretty good argument for throwing out the draft FULs CMS published last week. How can you solve X plus no less than 175% if you're not really settled on what X equals?

(THE NEWS: NACDS expresses concerns with new FUL list for pharmacy Medicaid reimbursement. For the full story, click here)

That's a problem because smaller, independent pharmacies could be facing reimbursement cuts of up to 38% to 44%, according to the National Community Pharmacists Association. And its not just mom and pop shops that lack the buying power of a big chain — according to NCPA, the typical independent's average acquisition costs are about 25% to 50% higher than the average publicly held pharmacy chain — that would get hurt by all this. "After a comprehensive analysis, one [National Association of Chain Drug Stores] member company found that more than half of the draft FULs were below the pharmacy's cost to acquire these products from a wholesaler," NACDS noted in a Oct. 21 letter to CMS.

First, CMS needs to settle on a fair definition of AMP is before it can determine the minimum amount it will pay pharmacies to dispense drugs to Medicaid patients. According to analysis conducted by Pembroke Consulting, nearly two-thirds of the drugs published in the original AMP data, were being sold by their manufacturers for less than 25 cents a pill — 175% up 25 cents or less doesn't add up to what a pharmacy will pay for that pill.