Last Ditch Effort for S.1951

Although I wasn’t planning to post again before Thanksgiving, I want to let you know about the joint letter about Average Manufacturer Price (AMP) sent last Friday by eight trade pharmacy and pharmaceutical supply chain trade associations. The text of the letter was made public this morning.

The letter urges U.S. Senators to support S.1951 (Fair Medicaid Drug Payment Act of 2007), which has only 33 co-sponsors right now. Key points in this bill:

• Removes mail order from the retail class of trade, which I identified as one of the most significant decisions in my Comments on AMP Final Rule.
• Raises Medicaid payment to 300% of AMP instead of 250%.
• Prevents publication of AMP data on the CMS website, which means it can’t be used as a reimbursement benchmark.
• Bases pharmacy payment on a weighted average AMP. (I’m unclear about the benefit of this provision because weighting could lead to a lower AMP. In fact, a 2005 OIG study found that an AMP weighted by Medicaid expenditures was lower than the simple average.)
• Applies the AMP formula only when three or more alternatives are available instead of two or more. This change will be especially beneficial for pharmacies, wholesalers, and PBMs during the first 180 days after generic launch.

Click here to read a useful summary that highlights the proposed mark-ups to the bill. The summary is identified as being created by American Pharmacists’ Association (APhA).

A related bill, H.R. 3140: Saving Our Community Pharmacies Act of 2007, is stalled in Congress according to Pharmacy Reimbursement Bill Stalls in Congress. (H.R. 3140 replaces AMP with a survey-based metric called “Retail Acquisition Cost.”) The article cites the so-called pay-go rules, which presumably also apply to S.1951.

“Concerns about the legislation's prospects stem from congressional "mandatory spending" budget rules, which require any spending increases to be offset by program cuts or tax increases. Budget estimates are that $3.5 billion will be needed to reimburse pharmacies fully for their costs of purchasing and distributing generic drugs for Medicaid patients.”

Regardless of the outcome, I must give credit to these associations for pulling out all the stops in support of their members.