Tuesday, November 17, 2009

Healthcare Reform Options for AMP

Have you been wondering what’s going on with our old friend Average Manufacturer Price (AMP)?

Never fear, Drug Channels is here!

I recently came across a useful summary from the law firm of Reed Smith in Health Reform Update: Focus on Prescription Drug Price Regulation. See the second page of their briefing for an overview of how AMP would be handled under the House or Senate healthcare bills.

To understand the business implications of AMP, I humbly suggest that you read the sections titled “Risks to the Superior Profitability of Generic Drugs” and “Replacing the Average Wholesale Price Benchmark” in my U.S. Pharmacy Industry: Economic Report and Outlook.

Here’s an excerpt highlighting two significant issues—the applicability of Federal Upper Limits (FULs) and publication of AMP data (however AMP is defined):
Both bills would also amend the provisions relating to FULs. The Senate bill strikes the mandate that CMS establish a FUL when there are two or more equivalent products, and instead authorizes FULs set at 175 percent of the weighted average of the AMPs for equivalent multiple source drug products available on a nationwide basis. Under the House bill, the FUL would be set at 130 percent of the weighted average of the AMPs. These provisions would also necessitate that manufacturers report to CMS the total number of units associated with AMP calculations.

On the other hand, the bills appear to reflect a moderate retreat from the AMP transparency contemplated by the DRA, in that they would amend the law to provide for public disclosure of the weighted average AMP for multiple source products, rather than individual manufacturers’ AMPs.
It's hard to predict precisely how everything will turn out, but AMP-based reimbursement will surely be here sooner if health care legislation passes.

In case you are wondering, the picture above is an accurate depiction of AMP’s chemical structure.

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