Wednesday, April 22, 2009

Sebelius on AMP and Importation

The Senate Finance Committee voted yesterday to approve Kathleen Sebelius as Secretary of Health and Human Services. See Panel Backs Sebelius for Health Post. Some last minute disclosure issues regarding politically sensitive campaign contributions almost derailed her nomination, but the full Senate is likely to confirm her.

So, what's next?

I thought it would be fun (yes, my kind of fun) to look at Governor Sebelius' responses to questions from the Committee on two popular topics here on Drug Channels: Average Manufacturer Price (AMP) and Importation.

You can savor all 137 pages of the political posturing for yourself here: Finance Committee Questions For The Record

AVERAGE MANUFACTURER PRICE

As you may recall, AMP is the reimbursement cap that will supposedly put half of all pharmacies out of business. (No, not really.) Here's the exchange from the Q&A:

Question (from Senator Grassley): The Medicaid statute requires states to reimburse prescription drugs in Medicaid by the average manufacturer price. The regulation implementing the statute was prevented from going into effect by a federal court. While maintaining compliance with the injunction on the regulation as previously issued, do you think CMS should withdraw the regulation and try to more accurately follow the statute?

Answer: I understand that stakeholders have many concerns about this regulation. If confirmed as Secretary, I look forward to working with you to better understand those concerns and explore potential solutions.

Very interesting. As I see it, Governor Sebelius gave a non-answer answer, leaving the door open to implementing AMP.

Balancing the concerns of stakeholders will be difficult. AMP's most important role today is as the basis for computation of brand manufacturer payments under the Medicaid drug rebate program. President Obama's budget proposes increasing the rebate amount from 15.1% to 22.1% of AMP. Since there is only one AMP calculation, this dual role creates conflict between manufacturers and retailers. The Medicaid rebate program suggests that manufacturers want the lowest AMP possible, whereas using AMP as part of a pharmacy reimbursement formula (for generics) means that pharmacies want the highest AMP possible.

The AMP battle is perceived to be even more important to pharmacy now that Average Wholesale Price (AWP) may cease to be. (See Farewell, AWP). AMP – an actual computed transactional price – was scheduled to be published online per the Deficit Reduction Act of 2005. Publication was temporarily suspended until at least September 30, 2009 by the Medicare Improvements for Patients and Providers Act of 2008 (S. 3101) and perhaps longer given the unresolved legal issues. AWP is not dead yet and won't be leaving without a fight.

IMPORTATION

Governor Sebelius is a big fan of importation as I discuss in Obama + Sebelius = Drug Importation. Check out this back and forth from the Q&A:

Question (from Senator Grassley): Will you support an importation program, and if so, how will you assure appropriate implementation that ensures public safety as well as providing access to lower cost prescription drugs?

Answer: There are number of options to lower the cost of drugs. We need to examine all options from expanding the use of generic drugs to providing greater flexibility to negotiate lower-priced drugs when appropriate, to reimportation of drugs from developed nations that have strict safety measures like the United States. That said, the recent incidents involving heparin and other consumer products has highlighted the potential challenges that must be addressed before we import drugs so we can be assured they are safe and effective. The President's FY 2010 budget includes new resources to plan for the safe reimportation of drugs, and I look forward to working with the Congress to implement such policies.

So while she acknowledges the dangers of diversion, I interpret her comment to mean that she will be working to provide the required certification to allow an importation bill to be implemented.

On the other hand, I see that Pharmaceutical Market Access and Drug Safety Act (S.525) has only 27 sponsors. Hmmm.

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