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5 Impacts of the AMP Final Rule

By  Leigh Anne Siino Leigh Anne Siino  on 2014-12-23 10:00:00  |  Featured in  Life Sciences
Leigh Anne Siino
Posted By Leigh Anne Siino
in Life Sciences
on 2014-12-23 10:00:00

5-Ways-the-AMP-Final-Rule-May-Affect-the-Management-of-5i-Products-by-ManufacturersIf you work in the pharmaceutical industry, like everyone else, you’ve probably been anxiously awaiting the new AMP Final Rule that was intended to be implemented over the summer, but was yet again delayed. The AMP Final Rule will change the way the Average Manufacturer Price (AMP), Best Price (BP) and Unit Rebate Amount (URA) are calculated, but it will do more than that. Perhaps one of the most important revisions written into the new rule is a new definition of what constitutes a “5i product.”

Those in the pharmaceutical manufacturing industry understand this term to mean injectable drugs that are “not generally dispensed through a retail community pharmacy.” While all other outpatient drugs are calculated using the Standard AMP, 5i products are calculated using a different 5i AMP.

With a new definition written into the law, though, there are going to be some changes including additional rules around what’s considered a “5i product.” Here are six more ways this new rule is changing the way 5i products are defined and managed. These descriptions lightly touch on the new implications, but for a further look at the proposed rule that’s expected to be passed any day now, watch our free webcast led by industry experts titled, The Insider's Guide to the AMP Final Rule, which will offer detailed insight to what this all means for the industry.

1. Inclusion of New Drug Types

Under the proposed new AMP Final Rule, “5i products” will include inhalation, infusion, instilled, implanted and injectable drugs that are “not generally dispensed” through retail community pharmacies (RCPs) as determined on a monthly basis. The 5i AMP will also now include both direct and indirect sales to retail community pharmacies. With this high level of monitoring and other changes, administrative costs are sure to see an increase.

2. New Master Data Management Requirements

Along with the new definition of 5i products, there could come new requirements pertaining to Master Data Management (MDM). What do we mean by MDM? It could be any master list of data shared and used across the organization, such as lists of products, customers, members or class of trade.

3. Increase to AMP and Increased Rebate Liability

With this new definition of 5i products, manufacturers will be required to change the way they calculate AMPs for many of their drugs, which could potentially mean an increase in rebate liabilities and reduction in profits. According to Arnold & Porter LLC, the Average Manufacturer Price will now mean “the average price paid to the manufacturer for the drug in the United States by wholesalers for drugs distributed to retail community pharmacies, and retail community pharmacies that purchase drugs directly from the manufacturer.” Associated discounts, rebates, payments and other transactions would also be included in the 5i AMP, such as those to physicians, pharmacy benefit managers (PBMs), health maintenance organizations (HMOs), managed care organizations (MCOs), insurers (excluding Medicare rebates), hospitals, clinics, outpatient facilities, mail order pharmacies, long-term care (LTC) pharmacies, hospices and other manufacturers that conduct sales as wholesalers or retail community pharmacies (RTCs).

4. Changes to Non-5i Drug Administration

There are large, and well-warranted issues and concerns with how 5i and non-5i drugs are administered. For many pharmaceutical professionals, these issues could be the most critical in terms of the AMP Final Rule.

5. A New Answer to the Question “What is 5i?”

With new language surrounding the definition of 5i products, there will be a new answer to the question “what is 5i?” Now the rule will no longer exclude payments, discounts or rebates to various entities such as clinics, hospitals, insurers, mail order pharmacies and Pharmacy Benefit Managers (PBMs).

With the impending passing of the AMP Final Rule, there is still much to be determined and understood. Fortunately, there are experts ready to give you all the information you need to prepare for the new rule and all the additional requirements and definitions that come along with it. 

The Insider's Guide to the AMP Final Rule
Leigh Anne Siino

Leigh Anne Siino

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Leigh Anne Siino is the Finance and Legal Solutions Lead with the Corporate and Enterprise practice at Paragon Solutions. In this role, she supports finance and legal teams at life sciences and healthcare payer organizations by helping them take a more prominent role in maintaining collaboration across business operations, as well as defining a company’s overall strategy. Leigh Anne has a decade of experience in such functional areas as: Finance (Operations and Reporting, Consolidations,) Planning, Budgeting, Forecasting, Enterprise Legal Management, Managed Markets, Gross-to-Net, Trade, Sales and Marketing Operations, Supply Chain, Order and Inventory Management, Contracting and Information Management. She is also an experienced project manager and technical liaison.

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