CCPA Speaks Out: Pharmacy Groups Continue to Fight AMP Rule

Author: Julie Khani and Charles Sewell


Ms. Khani and Mr. Sewell are copresidents of the Coalition for Community Pharmacy Action.


As the implementation deadline on Average Manufacturers Price (AMP) looms closer, the legislative activity on Capitol Hill reflects the urgency of this issue for community pharmacy. Committee chairmen in the House and Senate have introduced legislation to adjust the AMP system, which threatens to force thousands of pharmacies from the Medicaid program. More than 130 cosponsors support a bill that would replace AMP altogether.

The Fair Medicaid Drug Payment Act makes key adjustments to the AMP-based reimbursement limits to better ensure community pharmacy costs will be covered when dispensing generic drugs to Medicaid patients. The bills are S 1951, introduced by Senate Finance Chairman Max Baucus (D, MT), and HR 3700, introduced by Chairman Frank Pallone (D, NJ) of the Health Subcommittee on Energy and Commerce.

The Saving Our Community Pharmacies Act (HR 3140), introduced by Rep Nancy Boyda (D, KS), has attracted 131 bipartisan cosponsors. This would replace the AMP system with Retail Acquisition Cost based on actual pharmacy invoices. Both bills call for increased generic use in order to drive program savings.

As it stands, the rule released in May by the Centers for Medicare & Medicaid Services (CMS) will deal a crippling blow to community pharmacy. A staggering $8.4 billion is to be hacked from community pharmacy's generic-drug payments over the next 5 years—an overall reduction of 30% of pharmacy's Medicaid current generic-drug reimbursement.

The possible consequences of this decrease in reimbursement are alarming. Pharmacies that fill a large number of Medicaid prescriptions could be forced to shorten hours, lay off employees, and even close down completely— all of which threaten patient access to prescription drug care.

The Government Accountability Office has reported that pharmacies will be reimbursed at 36% below their cost to purchase generic medicines, on average. The study even questions the use of AMP as a benchmark at all.

Inadequate reimbursement rates reduce incentives for pharmacies to dispense lower-cost generic medicines, directly contradicting present efforts to implement cost-saving measures in the Medicaid program. For every 1% decrease in generic dispensing, Medicaid loses hundreds of millions of dollars. In other words, CMS' proposed definition for AMP will not simply hurt pharmacies and the Medicaid patients that rely on them; it could cost taxpayers billions of dollars a year.

Community pharmacy has labored tirelessly for a legislative solution to this looming catastrophe. Both the National Community Pharmacists Association and the National Association of Chain Drug Stores—along with numerous other pharmacy groups—are lobbying Congress and enlisting support from key lawmakers.

The Coalition for Community Pharmacy Action (CCPA) is an alliance between the National Association of Chain Drug Stores (NACDS) and the National Community Pharmacists Association (NCPA), which together represents more than 55,000 community pharmacies. CCPA leverages the support, effort, and infrastructure of NACDS and NCPA while engaging community pharmacy to participate and advocate on issues affecting the industry.

Congress must act to prevent these devastating generic-drug cuts from going into effect. The fight is not over, and, more than ever, it is essential for community pharmacy to get engaged. Pharmacists should contact their elected officials in Washington and request that they cosponsor these bills. Patients should be encouraged to do the same to protect their access to community pharmacy. They can personally invite members of Congress to visit their pharmacy, and they can submit opinion pieces to their local newspapers—anything to promote the message of increasing generic use and patient access to quality affordable medication.

The time to act is now. The future of community pharmacy depends on your support.