ccpa SPEAKS OUT: AMP Definition "Defines" Pharmacists out of Medicaid

FEBRUARY 01, 2007
Bruce Roberts, RPh

As defined by the federal government, AMP might as well stand for "Ain't My Price" instead of Average Manufacturer Price. Late last year, the Centers for Medicare & Medicaid Services (CMS) released its long-anticipated proposed regulation on AMP to implement provisions of the Deficit Reduction Act with its perverse logic of targeting Medicaid generic drug reimbursements for $8.4 billion in cuts.

Despite numerous contacts by the National Community Pharmacists Association, the National Association of Chain Drug Stores, the Coalition for Community Pharmacy Action (CCPA), and members of Congress, the CMSproposed definition of AMP simply will not cover the acquisition costs of generic drugs for community pharmacies. As it now stands under the proposed regulation, community pharmacies will start losing an average of $3 to $4 for every Medicaid generic they dispense after July 1.

With a disincentive like that, use of higher-priced brand name drugs inevitably will rise. A failure to increase generic use will cost Medicaid $475 million for every 1% of prescriptions filled with a brand name product that could be filled with a generic.

The lowest generic fill rate among states that do not actively promote generic drug use is 42%, while in states where generics are promoted the rate approaches 60%. It leaves a lot of room for improvement. Any budget increases associated with an accurately defined AMP that actually covers ingredient cost along with a realistic dispensing fee that includes overhead and professional services still would be offset many times over with increased generic use from incentivized community pharmacists.

Many community pharmacists will be forced out of the Medicaid program if the regulation and the cuts take effect, resulting in reduced access to lifesaving medications for Medicaid patients. If pharmacies are forced to close as a result of these drastic cuts, millions of non- Medicaid patients also will lose access to their pharmacy.

If patients do not have access to the medicines that control their diseases, you will see higher overall costs from increased doctors' visits and hospitalizations. This alleged cost-cutting move that targets pharmacies alone is both shortsighted and dangerous.

The CCPA is working with other groups to weigh in, and we will file our own comments/complaints as well.We are also working to have legislation introduced—both federal and state—to fix AMP. We will be providing you with more information and asking you to help in this fight in the days ahead.

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.