Complete Story

Legislative Update July 2006

Kelly Vyzral, Director of Government Affairs

CMS Delays Release of AMP Figures;
Definition Still Unclear
Mark McClellan, M.D., head of the Centers for Medicare & Medicaid Services (CMS), said his agency will not publicly release current average manufacturer price (AMP) figures, saying the figures "just aren't the right numbers to use." McClellan made the announcement at the National Community Pharmacists Association's (NCPA) 38th Annual Conference on National Legislation and Government Affairs in Washington, DC, May 21-23.

Congress recently made AMP the baseline for the pharmacy reimbursement of generic drugs in the Medicaid program. Independent pharmacists have raised concerns that the current AMP definition reflects only about 50 percent of the actual acquisition price of generic drugs. An AMP calculated too low, coupled with the relatively low average product cost of generics, would result in Medicaid reimbursements sharply below the pharmacy's costs. Under a provision in the Deficit Reduction Act that was enacted earlier this year, CMS was to post AMPs on July 1. AMP historically has been a proprietary figure known only to manufacturers and CMS.

"Pharmacists have made it clear to us that unless AMPs are defined and calculated accurately and include only prices that are available to the 'retail class of trade,' they will not accurately reflect prices available to retail pharmacies," McClellan said. "We know that an imprecise definition of AMP, especially if publicly posted, will be misleading to state Medicaid directors and others who will use this as a reference point for setting pharmacy reimbursement."

In spite of his acknowledgement that an inaccurate definition of AMP could result in serious financial consequences for the nation's community pharmacists, McClellan did not address the need for the definition of AMP to reflect pharmacists' true drug acquisition costs.

McClellan said CMS is currently developing a revised definition of AMP that "will assure an accurate and effective AMP calculation." The new definition, along with an initial round of AMP data based on the new definition, will be released for public comment "later this year."

OPA will continue to monitor this issue closely and keep you updated. Keep your eye on the OPA website; when the new and improved definition of AMP is released, CMS will be looking for public comment. It's vitally important that the final definition reflect pharmacy's true acquisition cost.

OhioCongressmen Cosponsor Bill that Would Ease Pharmacists' Financial Burden as They Implement New Medicare Benefits for Seniors
U.S. Senator Mike DeWine is cosponsoring S. 2563, the Pharmacists Access and Recognition in Medicare (PhARM) Act, a bill that would further empower pharmacists to provide Medicare beneficiaries access to the affordable medicines that they need.

"Pharmacists are an important component in the healthcare process, and in rural areas are often the primary sources of medical information for their patients," said Senator DeWine. "This bill would help give pharmacists the support they need as they assist patients transitioning to the new Medicare Part D benefit, by ensuring that pharmacists are reimbursed promptly and guaranteeing beneficiaries access to local pharmacies."

The PhARM Act would allow pharmacists to receive payment within 14 days of submitting their claims to participating Medicare plans. It would also clarify what pharmacies a beneficiary can visit by eliminating branding on Medicare cards issued after the bill becomes law. Finally, the PhARM Act calls for a two-year community-based Medication Therapy Management Services (MTMS) demonstration program where pharmacists would help beneficiaries who take multiple medications or have chronic conditions appropriately take those prescriptions to improve their health and quality of life.

On the House side, U.S. Representatives Sherrod Brown, Tim Ryan, and Paul Gillmor are the Ohio cosigners on a similar bill, H.R. 5182, the Fair and Speedy Treatment of Medicare Prescription Drug Claims Act of 2006, which would also require drug plans to pay pharmacists within 14 days for clean claims submitted electronically, require drug plans to notify pharmacists within 10 days if there are problems with submitted claims, prohibit drug plans from issuing "co-branded" cards that confuse beneficiaries about what pharmacies they may use, and authorize a demonstration program using pharmacists to further explore the benefits of Medication Management Therapy Services. H.R. 5182 would also set minimum levels for generic drug dispensing fees as an incentive for pharmacists to dispense lower cost generic drugs.

Joint Commission on Medicaid Reform
On June 1, 2006, OPA was given the opportunity to testify before the Joint Legislative Committee on Medicaid Technology and Reform regarding the impact of the Federal Deficit Reduction Act of 2005 on Medicaid pharmacy reimbursement and the Ohio Medicaid program. We used the opportunity to drive home a couple of important points.

First, pharmacies in Ohio are currently having serious financial concerns. Slow reimbursement and low rates of reimbursement in Medicare Part D have been difficult. Some of the pharmacies have had to borrow tens of thousands of dollars just to pay wholesalers for drugs. Medicaid is switching to managed care for a large portion of its patients, and some of those companies are paying slowly. Our cash business has been price regulated through discount cards like BestRx and Golden Buckeye. All these pressures are combining to make it difficult to survive.

Secondly, our pharmacists serve an important role in the health care of all Ohioans. They are often located in rural, underserved areas. They provide much-needed jobs to their community. The pharmacist is the most available health professional, and is often turned to for advice on over-the-counter medications, as well as prescription. They are open nights, weekends and holidays, often providing free delivery service. We know that delivery service saved lives in January, when the computers did not operate properly for Part D recipients.

We also gave the Committee our two-fold solution to the serious problems facing pharmacies who serve Medicaid populations.

First, our pharmacies need enough reimbursement to make a profit. The cost to fill a prescription for both chain and independent pharmacies in Ohio is about $10. We believe that a $15 minimum fee to fill generics would help pharmacies survive. That would allow costs to be met, would encourage the use of the less-expensive generics, and would let pharmacies make a profit.

Secondly, we need faster updating of prices in the Medicaid computer for brand name drugs. Currently, they only update one time per month, while our pharmacies face thousands of price increases before the computer is updated. It is inherently unfair for pharmacies to have to absorb these losses. We request that the department update brand name drug prices at least once per week. The state employees' program and others update nightly, so we do not feel this is asking too much.

CMS Co-branding and Marketing Guidelines
CMS recently solicited comments regarding the Co-branding and Marketing Guidelines for Medicare cards. You may view OPA's comments in the following linked article entitled $$Link
"OPA Comments on New Medicare Card Guidelines"
0$$?.If you have any questions or comments about the issues mentioned in this article, please contact Kelly Vyzral, Director of Government Affairs, at 614.586.1497 or

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