If you are a revenue management or government programs professional in the pharmaceutical industry, the impending AMP Final rule is going to affect you. The Centers for Medicare and Medicaid Services (CMS) laid out a set of proposals to redefine the Average Manufacturer Price, or AMP, as well as new guidelines for computing Medicaid pharmacy payments and structural elements of the Medicaid managed care rebates, which are now mandatory. The business implications of this new rule are wide-reaching, including:


  • Increased data architecture
  • Leveraged wholesaler relationships
  • Strained internal resources
  • Increased rebate liability
  • More granular pricing reporting
  • Changes in calculations
  • Need for compliance monitoring
  • Updates to Gross-to-Net forecasting
  • Evaluation of portfolios
  • Added reporting of transfer sales
  • Evaluation of contracts

The CMS proposed this rule in February of 2012, and it was expected to go into effect over the summer, but as of this November, the AMP Final Rule implementation has been delayed yet again. According to John Shakow of international law firm King & Spalding, the final rule is “still in clearance within the Department.” Although the final publishing of the rule has been postponed again, the impending publication and enforcement of the AMP Final Rule is expected very soon, and will certainly have an effect on the industry. Here are a few more things you should know about the impending AMP Final Rule:

New Rules for Defining Independent Pharmacies 

Perhaps the most critical aspect of the new AMP Final Rule is a redefinition of the Average Manufacturer Price in accordance with language from the Affordable Care Act. According to the new rule, a “retail community pharmacy” would be defined as “an independent pharmacy, a chain pharmacy, a supermarket pharmacy,” or “a mass merchandiser pharmacy that is licensed as a pharmacy by the State and that dispenses medications to the general public at retail prices.” So, according to this new definition, Average Manufacturer Price sales would no longer be allowed at mail order pharmacies, Long Term Care (LTC) pharmacies, or for Pharmacy Benefits Managers (PBMs), including pharmacy services within integrated healthcare systems such as Veterans’ Affairs or Kaiser Permanente. The implications for 340B covered entities, however, remains to be seen and might leave some room for interpretation.

New Rules Regarding Medicaid Pharmacy Reimbursement

In addition to new rules for defining independent pharmacies, the CMS has also proposed new standards for the fee-for-service pharmacy rates of State Medicaid programs. Right now, State Medicaid programs go by the Estimated Acquisition Cost, or EAC, but the Centers for Medicare and Medicaid Services plans to replace this standard with the Actual Acquisition Cost, or AAC. This new standard would be determined through state or federal surveys of pharmacy buying data. Some states, such as Alabama and Oregon, have already started implementing the AAC standard, so there is much to learn from their experience. The implications for 340B providers from state to state will be particularly important to watch, as each state can make its own decisions on how to implement the AAC, which will determine things like billing rules and Medicaid carve-outs.  

New Rules for Mandatory Medicaid Rebates

The final aspect of the AMP Final Rule centers on new mandatory rebates for drugs utilized within Medicaid Managed Care Organizations, or MMCOs. Under this rule, a new provision will be added to the American Care Act to align MMCOs with the mandatory manufacturer rebates that have long been a part of standard fee-for-service programs within Medicaid. The CMS exempted prescriptions purchased through the 340B Drug Pricing Program from the rebates, although the implications of this exemption haven’t been fully realized. The industry will likely have to develop its own standard for distinguishing 340B claims from other claims in order to align with this aspect of the new rules.

State and federal officials, as well as industry professionals, are still eagerly awaiting the final publication of the new AMP Final Rule following review by the Office of Management and Budget (OMB). The anticipated May publishing date has long since passed, as these OMB reviews often take upwards of 90 days once they finally reach the office, but the finalized version is expected to be released before the year’s end, leaving a bit more time to prepare for the change.