If you work in the life sciences industry, you have undoubtedly heard about the impending AMP Final Rule, which dictates the Average Manufacturer Price (AMP) under the Patient Protection and Affordable Care Act (PPACA). According to the Office of Information and Regulatory Affairs, the Final Rule will revise the requirements associated with Medicaid reimbursement for covered outpatient drugs, drug rebate programs, Medicaid coverage and payments as part of the Affordable Care Act.
But what does this really mean for pharmaceutical companies?
Insiders, John Shakow, a partner at FDA & Life Sciences Practice Group, King & Spalding and Paragon Solutions' own Principal Consultant, Life Sciences Leigh Anne Siino, lead the upcoming webinar, “The Insider’s Guide to the AMP Final Rule: Breaking Down the Rule and Its Business Implications,” and will address the implications of these new requirements and discuss how your company can get ready for the impending changes the rule will impose.
What the AMP Final Rule Means for Pharmaceutical Companies
The AMP Final Rule will affect pharmaceutical companies in several different ways. There will be new requirements for not only the Average Manufacturer Price, but also the Best Price (BP) and Unit Rebate Amount (URA), which will mean additional work for manufacturers. Due to the time-consuming nature of these new requirements, it is anticipated to be difficult and costly for some companies to implement the changes. There are still many unanswered questions, but it seems likely that the Final Rule will increase compliance costs and manufacturers’ rebate liability. Manufacturers could now have to trace all pharmaceutical sales through wholesalers to retail community pharmacies (RCPs), regardless of whether or not there was a chargeback. Ultimately, this could result in additional infrastructure costs and strain on internal resources. The increased rebate liabilities, changes in price calculations, expansion of the Medicaid Drug Rebate Program (MDRP) and noticeable changes to business processes and system architecture could be quite a shock to those organizations, in both an operational and financial respect, that haven’t fully prepared.
[Learn more about the AMP Final Rule by reading Leigh Anne's blog article, "What the AMP Final Rule is and What It Means For You"]
Pharmaceutical Manufacturers React to the Impending Final Rule
Industry-wide, pharmaceutical professionals have been largely reacting to the upcoming AMP Final Rule with concern and even confusion, which is understandable, especially considering the wait and the constant delay of the rule over the past year or so. While the AMP Final Rule won’t completely change the face of the pharmaceutical industry as we know it, the new requirements will undoubtedly have an effect on the profit margins and operational structure of many pharmaceutical companies.
Complying with the new rule will mean a lot more work required, with less money coming in for pharmaceutical manufacturers. These new requirements will inevitably result in lower profits for many pharmaceutical companies. This can be scary, but there are things manufacturers can do now to help soften the blow in the future, as well as to ensure that while more cash is going out the door, it’s not more cash than contracted. With so much change on the horizon, it’s important to understand the implications of these new requirements before they go into effect, so your company can prepare to weather the storm.
Upcoming Webinar to Address Implications of the Final Rule
The upcoming webinar – "The Insider’s Guide to the AMP Final Rule: Breaking Down the Rule and Its Business Implications" – will address all the implications of the new rule, ending with a practical discussion of how to prepare for the AMP Final Rule. You’ll hear expert, detailed information about what the Final Rule is, what its implementation will mean for pharmaceutical businesses, along with the next steps to take in preparation for the impending changes.
The webinar will cover:
- An overview of the latest CMS publication,
- Manufacturers’ reaction to the new proposed requirements
- What parts of cross-functional organizations will be affected
- Average Manufacturer’s Price and Best Price calculations
- Line extensions
- Additional Medicaid rebate issues
- Authorized generics
This informative discussion will end with a “roadmap” for the next steps companies should take, including educating Senior Management through cross-functional communication, spotting issues with the Government Pricing Team, reevaluating existing assumptions and policies, evaluating the portfolio and contracts under the proposed rules, preparing to file comments and considering the implications for ongoing activities such as mergers and acquisitions, clinical development, FDA approval, ongoing reviews or recalculations, enforcement activity and legal changes.
After the webinar, pharmaceutical professionals will walk away with a detailed understanding of the AMP Final Rule, what its business implications are and the next steps to take to prepare for its official publication.