Friday, August 13, 2010

Secret AMP Letter Emerges; FUL Delay Likely

Ladies and gentlemen, allow me to present the heretofore missing July 20 letter from NCPA and NACDS to the Centers for Medicare & Medicaid Services (CMS) regarding Implementation of Medicaid AMP Pharmacy Reimbursement Provisions of P.L. 111-148. I didn’t even have to file a Freedom of Information Act request to get it!

The Patient Protection and Affordable Care Act requires CMS to implement a new definition of Federal Upper Limits (FUL) based on a new definition of Average Manufacturer Price (AMP) “without regard to whether or not final regulations to carry out such amendments have been promulgated.” In the July 20 letter, NACDS and NCPA make a compelling case that “a proposed rule with comment period be published so that the reimbursement approach is fair to all parties involved.”

CMS will either back down and delay implementation of the new FULs or face the prospect of intense litigation that CMS doesn't have the juice to win. Adam’s odds of new FULs in 2010 are now 7-1 against. Thus, the current bogus FULs will likely remain in place a bit longer. (See Won't Get FULed Again.)

If you’ve been following Drug Channels this week, then you’ll have noticed my references to a letter sent by NACDS and NCPA to CMS regarding AMP. In CMS Wants Public Transparency to Pharmacy Profits, I state that NCPA legal counsel labeled this letter Top Secret “due to the ongoing litigation involving AMP with the federal government.” (Their words, not mine.) In DC Fracas Over CMS Transparency Proposal, I point out that an August 6 letter uncovered by The Hill is not the Top Secret letter.

Having now read the July 20 letter, I have no idea why NACDS and NCPA insisted on being so mysterious. The letter merely contains potentially legitimate technocratic objections mixed in with the usual whining about dispensing costs.

The July 20 letter also makes it quite clear that CMS should expect a serious legal challenge if they proceed without following the pharmacy industry’s “suggestions.” CMS lost the last legal round in December 2007 and was enjoined from implementing the AMP-based FUL provisions from the Deficit Reduction Act of 2005. See No AMP for You!

The August 6 letter lays out the companion legal challenge to CMS’ proposed survey of prices paid by pharmacies to wholesalers or manufacturers. As I have predicted, pharmacies will fight to the bitter end to prevent any transparency into ingredient cost spreads, which can only be maintained by keeping drug acquisition costs hidden from third-party payers. The First Rule of pharmacy spreads is, you do not talk about pharmacy spreads.

Meanwhile, I’m sure true Fight Club fans are disappointed to learn that the July 20 and August 6 letters didn't turn out to have been the same letter all along.


I hope that paraskevidekatriaphobia did not prevent you from enjoying the third part in this exclusive series from Drug Channels!

1 comment:

  1. Who decided that a benchmark was needed for prescription pricing? Was it independent retail pharmacists? I'm to young to remember. There have been Third Parties my entire career.