Friday, March 16, 2007

AMP Battle Rages On

In January, I identified Lobbying for Pharmacy Profits as a key theme for 2007. The message is clearly getting through to our elected officials judging by yesterday's story in Drug Store News stating:

"In a bipartisan gesture, 46 senators co-signed a strongly worded letter March 13 asking CMS acting administrator Leslie Norwalk to hold off on the new Medicaid reimbursement plan until the agency had established a clearer definition of the AMP of a drug."

Ironically, Tuesday's Wall Street Journal article (Why Generic Doesn't Always Mean Cheap) highlights the perception challenge facing the pharmacy lobby. As readers of this blog know by now, profits on generic drugs subsidize the retail and wholesale distribution of much more expensive branded products. Recall that dollar-profit disparities between brand and generic dispensing created the need for AMP in the first place. (See The Attack on Generic Profits in Drug Channels for background.)

Manufacturers and drug wholesalers are also on a collision course over generics, especially if the next round of fee-for-service agreements leads to tighter payment structures for wholesalers. The big 3 -- AmerisourceBergen (NYSE:ABC), Cardinal Health (NYSE:CAH), and McKesson(NYSE:MCK) -- have been relatively quiet on this issue lately, but I expect that importation legislation will make the conflict clear. I wrote about this issue a couple of weeks ago in Generics=Channel Strife?.

While you ponder these strategic matters, I'm sure that the AMP fanatics (you know who you are!) will surely enjoy reading the comments submitted to CMS regarding the proposed AMP legislation. They can be found on an obscure web page buried deep within the CMS site: Electronic Comments on CMS-2238-P (If the link doesn't work, go to CMS' main electronic comments page and search for Docket ID CMS-2238-P.)

I'll post some thoughts on the massive amount of AMP comments in a week or two. In the meantime, you can get ready for March Madness by filling in The Onion's comphrehensive NCAA basketball bracket.


  1. For what it's worth, CMS hasn't even posted half of the AMP rule comments on the web yet.

  2. Nor have they posted any of the comments received from Pharma regarding Best Price and AMP. Naturally, they would be highly concerned about best price since half of the Pharma out there have never included PBM rebates in their best price reporting.

  3. If you go to BIO's website you can pull up their comments, which actually ask for a tougher AMP. As you could guess, goal is clearly to get the lowest AMP possible on their part.

  4. Here's the link for the BIO comment:

    As the post above notes, CMS has not posted all of the comments. I'm not sure why.


  5. Thanks for the link! I wonder whether PHRMA submitted a similar letter?