ccpa SPEAKS OUT: Coalition Pushes for Revised AMP Definition

DECEMBER 01, 2006
Bruce T. Roberts, RPh

Next year, the Coalition for Community Pharmacy Action (CCPA) will be committing a significant amount of energy and resources to Medicaid reimbursement issues—both in the newly elected 110th Congress and in state legislatures across the land.

Community pharmacy plays a vital role in the Medicaid program, and changes made to the Medicaid policy can have a significant impact on pharmacy operations. It is imperative to make certain that Medicaid beneficiaries have access to the medications they need from the health care professionals they trust—their community pharmacists—in a manner that is cost-effective, without sacrificing patient safety.

As Congress works to reduce federal spending, however, Medicaid reimbursements to pharmacy have become a target for cuts. Lower pharmacy reimbursement rates under Medicaid could result in a reduction of pharmacy services for patients, could mean longer lines and shorter hours as store staffs are cut back, and could even result in store closures. We at CCPA, the government affairs coalition forged by the National Community Pharmacists Association (NCPA) and the National Association of Chain Drug Stores, are focusing much of our attention on a fair redefinition of Average Manufacturer Price (AMP). Earlier this year, Congress ordered that AMP be used as the basis for Medicaid reimbursement for generic drugs in 2007. AMP is a proprietary number known only to the manufacturers who report it and to the Centers for Medicare & Medicaid Services (CMS), which collects the data for rebate purposes.

AMP was created as a benchmark for rebate payments paid by manufacturers to state Medicaid programs. As such, there is an inherent desire on the part of the manufacturer to report the lowest price possible. CMS should redefine AMP so that it reflects only manufacturers' sales to, and price concessions actually received by, traditional communitybased retail pharmacies. CCPA recommends the following:

•We ask that members of Congress contact the secretary of Health and Human Services and ask that AMP be defined so that it reflects pharmacies' total ingredient cost. If AMP was defined so that it covers 100% of pharmacists' ingredient costs, then an adequate reimbursement could be attained. NCPA and the coalition are on Capitol Hill every day representing community pharmacists' interests, but we need you to encourage your senators and representative in Washington to contact the secretary and make this request.

•We ask that the study of pharmacy reimbursement called for in the Deficit Reduction Act, enacted earlier this year, include an analysis of statedetermined dispensing fees to ensure that pharmacy operating costs are adequately covered under state reimbursement formulas.

•We want CMS to limit the scope of AMP data released to the states until AMP is redefined. This will prevent states from inadvertently using flawed AMP data to set pharmacy reimbursement rates.

Mr. Roberts is executive vice president and chief executive officer of the National Community Pharmacists Association.

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.

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