MEDICARE PART D SPARKS RISE IN GENERICS

Although Congress setthe baseline for pharmacyreimbursement of genericdrugs in the Medicaid programas the Average Manufacturer Price (AMP),top officials at the Centers for Medicare &Medicaid Services (CMS) told pharmacy leadersthat they will not be encouraging states to usethose figures to calculate payments. That newswas good for independent pharmacists, whocomplained that the current AMP definitionreflects only about 50% of the actual acquisitionprice of generic drugs.

"An AMP calculated too low, coupled with therelatively low average product cost of generics,would result in Medicaid reimbursements sharplybelow the pharmacy's costs," National CommunityPharmacists Association (NCPA) officials said.

In agreeing with the independents'associationofficials, CMS Administrator MarkMcClellan, MD, PhD, said that his agency wouldnot comply with a provision in the newly enactedDeficit Reduction Act that instructed CMS topost AMPs on July 1, 2006. These "just aren'tthe right numbers to use," he said.

Dr. McClellan addressed NCPA's Annual Conferenceon National Legislation and GovernmentAffairs in Washington, DC. "Pharmacists havemade it clear to us that, unless AMPs are definedand calculated accurately and include onlyprices that are available to the ‘retail class oftrade,'they will not accurately reflect pricesavailable to retail pharmacies," he said. "Weknow that an imprecise definition of AMP, especiallyif publicly posted, will be misleading tostate Medicaid directors and others who will usethis as a reference point for setting pharmacyreimbursement," he told the meeting.

Dr. McClellan said that CMS is currentlydeveloping a revised definition of AMP that "willassure an accurate and effective AMP calculation." Additionally, he said that CMS would continueto encourage state Medicaid programs tocreate incentives for the use of generic drugs,including variable reimbursement systems thatpay pharmacists higher dispensing fees forgenerics. According to Dr. McClellan, "if statesdo not maintain the right incentives for genericutilization, any savings will be lost to higher andmore expensive brand-name utilization."