Thursday, July 12, 2007

Reactions to AMP

Reactions by pharmacy groups to CMS’ final rule range from breathless predictions of doom to mild disapproval. Here’s a quick round-up and some brief comments on the real issue behind the issue. (See my analysis of the AMP rule for background.)

Pharmacy Associations

NCPA continues their tradition of over-the-top hyperbole with this reaction: Final CMS Medicaid Reimbursement Rule Shows Reckless Disregard for Patient Welfare by Threatening Viability of Independent Community Pharmacies, Says NCPA. In case you miss their point or don’t want to read their verbose release, they have posted this summary cartoon. The tear on Mom's face is a nice touch.

The Association of Community Pharmacists Congressional Network, a relatively new organization, shares similar fears in CMS Assaults Neighborhood Pharmacies With New Rule Cutting Reimbursements For Generic Medicaid Drugs. Their first sentence tells you everything you need to hear about their POV: “Patient access to their neighborhood pharmacist is under assault, as the country’s healthcare delivery system teeters on the edge of destruction.” Yikes!

Meanwhile, their chain cousins at NACDS weigh in by pledging an “All-Branches, All-Level Government Strategy” to Fix Medicaid Reimbursement Model. Their response indicates a much greater emphasis on the technocratic aspects of AMP calculations instead of outright opposition to the concept of a cost-plus pharmacy reimbursement. Personally, I thought CMS’ extensive Q&A in its 587-page final rule document showed very limited room for flexibility. I suspect NCPA’s hyperventilating approach will be more persuasive to Congress.

PCMA, which represents pharmacy benefit managers (PBMs), showed some mild disapproval that mail pharmacy is now part of the retail class of trade in PCMA Statement on Average Manufacturer Price (AMP) Rule in Medicaid. As I pointed out on Monday, the direct impact on PBMs from this rule will be minimal.

What’s Really Going On

NCPA has done a good job of spinning AMP into a debate about “access.” However, the real controversy stems from the unusual economics of today’s pharmacy supply chain – dispensing generic drugs subsidizes brands. See The Attack on Generic Profits in Drug Channels for some background.

IMHO, CMS is forcing dispensers to restructure their business models to eliminate hidden cross-subsidies, which is exactly what has happened to physicians as a result of Medicare Part B Average Sales Price (ASP) model. Will AMP lower total spending or simply shift costs to commercial payers? Is it truly Armageddon for independents?


I’ll continue to check in on these issues, especially as Monday’s post led to record traffic on Drug Channels this week. FYI, our web traffic is doubling every 3-4 months.

Meanwhile, I plan to take a break from AMP coverage to catch up on some other news. I receive many nice emails about this blog. As always, I appreciate the kind words and welcome your comments and emails.

1 comment:

  1. AnonymousJuly 12, 2007

    Oh how I wish I had a time machine. I would go back in time, find the exact day I decided to become a pharmacist, then go back one day prior to that, and shoot myself.