Wednesday, September 16, 2009

Baucus Bill: Weighted AMP+75%

Senate Finance Committee Chairman Max Baucus officially released the text of a massive health care reform bill. Read the full text of the Baucus plan – 223 pages of wonky goodness.

The “Changes to Medicaid Payment for Prescription Drugs” (page 55) sets the Federal Upper Limit (FUL) to the weighted Average Manufacturer Price (WAMP?) x 175%, i.e., WAMP+75%.

Quick reaction: While 175% is less than 250%, I expect WAMP to be greater than AMP, especially since the proposal excludes mail order pharmacies. Seems like a victory for the pharmacy groups that lobbied for an increase, although I predict they will still ask for more.

Here’s the full text of the proposal:
“The Chairman‘s Mark would change the FUL to 175 percent of the weighted average (determined on the basis of utilization) of the most recent AMPs for pharmaceutically and therapeutically equivalent multiple source drugs available nationally through commercial pharmacies. The Mark also would clarify what transactions, discounts, and other price adjustments were included in the definition of AMP. Additionally, the Mark would clarify that retail survey prices do not include mail order and long term care pharmacies. The Mark also would expand the disclosure requirement to include monthly weighted average AMPs and retail survey prices.”
Note the last sentence means that AMP (and its variants) will be disclosed. We are one step closer to a new model for pharmacy reimbursement in the post-AWP world.


  1. Adam, if you don't ask, then you don't get.

    And with the new weighted AMP excluding mail and LTC pharmacy providers, don't expect the retail community to jump up and down in excitement. Keep in mind that AMP is only for multisource products which are almost always bought via a competitive bidding program. Common sense tells you than WMT and WAG are purchasing their generics as low as Medco and others. (Branded products are another story). Of course this will insure that new WAMP is kept as tight as the old AMP.

    So now we see a further reduction....and more transparent....mode to the pricing reimbursement program for retail pharmacies.

    I am certain that the "dispensing fee" side of things will increase dramatically to the 7 buck range.

    Heck, it's just like Delaware. You can't give the pills away for nothing in a traditional retail store (chain or indy)....unless you got the high margin meat and produce to protect you.

    Thx Adam.

  2. FYI, Ron Lyon at the Pharmacy Rants & Raves blog estimates that the Baucus bill sets the FUL at AWP-51%. See I Think the Baucus Bill Sets Generic Pricing at ~AWP-51%.


  3. Do you know how the weighting will be done?

  4. Using AWP as a benchmark for reimbursement on multisource generics is about as useful as asking a Walmart pharmacy to fill your prescription quickly.

    Also, notice that this reimbursement model only prevents the government from "overpaying" on cheaper generics. For example, take a generic prescription with an acquisition cost of $120. I assume that such a prescription will still be subject to a MAC, and that Medicaid won't pay $210 + a dispensing fee. It's a brilliant idea, removing the incentive for pharmacies to dispense cost-effective generics.

  5. Six states don't have a MAC for generics, so the FUL is effectively a tool for the Feds to cap payments by these laggard states. The fact that most states have a MAC list is just one more reason why the impact of AMP won't be as devastating as some pharmacy groups claim.


  6. Adam,

    Most Medicaid programs have clauses in their regulation in where they will reimburse providers the lower of:

    1. Contract price
    2. State MAC
    3. FUL
    4. U&C