Tuesday, May 15, 2007

Topping Off AMP

Drug Store News is reporting that Iowa and Kansas are restoring some payments to pharmacies that will lose reimbursement dollars when the new Average Manufacturer Price (AMP) system is finally implemented.

Expect more state-level action over the next few months. I am also skeptical that the July 1 implementation for AMP will actually happen, especially with a new leader at CMS.

By way of background, the new AMP methodology will reduce pharmacy profits by capping reimbursement for dispensing generic drugs. Keep in mind that this solution was endorsed by the Medicaid Commission in 2005 to control state spending, especially in light of data that filling a generic Medicaid prescription earned a pharmacy $18.30 more per script. The practical outcome will be trouble for independent pharmacies and the wholesalers that supply them.

The moves by Iowa and Kansa are especially notable since both states have a relatively high number of retail prescriptions per capita. (Source: www.statehealthfacts.org):

Retail Prescription Drugs Filled at Pharmacies per Capita in 2005
U.S. Average = 10.8
Iowa = 13.9 (#8)
Kansas = 12.3 (#14)

Independent pharmacies have done an impressive job lobbying to slow or modify CMS’ implementation of the Deficit Reduction Act. They have superior PR, solid grassroots organizing, and are BOILING MAD. Just consider that CMS received an unprecedented 3,000 responses to its Dec. 22 Proposed Rule. At least two-thirds of the responses came from individual pharmacists. Browse this set of comments to feel the outrage -- Comment #7 (p. 11) is particularly good!

Every major company and trade association also wrote to CMS with viewpoints – a mere 120 MB of reading material. You can peruse all of the comments yourself on 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.


P.S. Today's Wall Street Journal reports that bloggers are getting loads of free stuff -- called "blogola" -- from TV networks looking for favorable publicity. If you feel like emulating CBS, please send any appropriate blogola -- RFID chips, unexpired drug samples, pharmacy automation equipment, etc. -- to my office address. Thanks!


  1. AnonymousMay 15, 2007

    Isn't CMS required by statute to implement the DRA... including AMP reimbursement to pharmacies... by July 1? Even with the change in leadership, they are required to hit that date. How do you think they might be able to postpone implementation?

  2. Yes, I know. However, CVMS has already delayed implementation a few times. (You may recall that AMPs were originally scheduled to be disclosed last summer.)

    I still believe that cost-plus reimbursement will become the norm for the pharmacy supply chain. But like all successful forecasters, I will predict the event but not the date.