5-Things-You-Need-to-Know-About-the-Proposed-Expansion-of-the-MDRPAre you a life sciences professional who has been tasked with the heavy responsibility of preparing your company for the new AMP Final Rule? If so, and you are probably wondering what is the AMP Final Rule? It is designed to align with the language and guidelines of the Affordable Care Act (ACA) and is expected to go into effect in the near future. A proposed expansion of the Medicaid Drug Rebate Program is an integral part of this new rule. The ongoing anticipation of the AMP Final Rule has caused a great deal of stress, concern and confusion for decision-makers throughout the U.S. pharmaceutical industry, and many pharma professionals are still unsure of what it all means. There are, however, a few things that are apparent.

What the Proposed Expansion Could Mean for You

The Centers for Medicare and Medicaid Services (CMS) has yet to publish their final ruling on the new Average Manufacturer Price standards, as the proposal is still held up in the Office of Management and Budget, but after multiple delays, publication of the Final Rule is expected any day now. Part of the new rule is a proposed expansion of the Medicaid Drug Rebate Program, or MDRP. According to the Medicaid Drug Rebate Program webpage of Medicaid.gov (last updated on November 14, 2014), the MDRP is a program including CMS, State Medicaid Agencies and participating drug manufacturers. The program is intended to offset the cost of State and Federal outpatient prescription drugs that are currently dispensed to Medicaid patients. With some 600 drug manufacturers in all 50 States and the District of Columbia currently participating in this program, the proposed expansion of the MDRP stands to affect a massive segment of the life sciences industry in the United States.

While the total implications of the new ruling are yet to be fully understood, it is widely accepted that in effort to maintain compliance, there will be an overall increase in cost, workload and reporting across the board. Here are the five essential components you need to understand about the AMP Final Rule and the proposed expansion of the MDRP, and how it will potentially affect your organization in the future:

1. Inclusion of New Territories in the MDRP

Under the current Medicaid Drug Rebate Program rules, the Secretary of the Department of Health and Human Services is authorized to enter into a Medicaid Drug Rebate Agreement on behalf of the 50 States and the District of Columbia. Under the new proposed rule, the definition of “States” has been modified to include all United States territories, including Puerto Rico, the Virgin Islands, Guam, Northern Mariana Islands, and American Samoa.

2. New Customer Master Data Standards

With new territories included in the MDRP, companies will face new standards for calculating geo-targeted Customer Master Data in order to determine average pricing. This may lead to issues of fairness, some worry, because there will be different price structures in different territories, and the states’ authority to expand rebate agreement terms remains to be seen and fully understood.

3. Added Reporting Requirements 

According to international law firm Morgan, Lewis & Bockius, this inclusion of new territories, “would require manufacturers to include data in their price reporting systems that may not be captured in the financial records of domestic transactions.” Puerto Rico is currently reported separately, for example, but this would change under the proposed new Final Rule.

4. Increased Utilization of the MDRP

The prescriptions covered under the MDRP would inevitably expand with the inclusion of these new territories, which simply means that more people will be utilizing the program. The rebate liability could also go up as the number of covered prescriptions expands to territories with Medicaid plans. 

5. Additional Costs for Pharmacies and Manufacturers

With new sales transactions from these territories included in the Average Manufacturer Price (AMP), average prices are anticipated to decrease noticeably under the new AMP Final Rule. If you find yourself wondering what this all means for you and your organization, you’re not alone. However, there are experts waiting to help guide you through the various business implications of the new AMP Final Rule.

The Insider's Guide to the AMP Final Rule