In landmark victory for retail pharmacy, feds agree to drop last AMP provisions

Marks end of long battle between federal health officials, chain pharmacy

ALEXANDRIA, Va. — In a clear victory for retail pharmacy, the National Association of Chain Drug Stores and the National Community Pharmacists Association have agreed with the Centers for Medicare and Medicaid Services on a motion to dismiss the Medicaid average manufacturer price lawsuit. The landmark agreement came after CMS withdrew the last remaining provisions of the AMP rule that had been blocked by a preliminary injunction following litigation by NACDS and NCPA.

NACDS and NCPA leaders were jubilant. By agreeing to end the lawsuit, the chain and independent retail pharmacy industries have resolved a long-running and bitter dispute with the federal government over the way pharmacies will be reimbursed for dispensing generic drugs to low-income Americans covered by Medicaid. A dismissal of the lawsuit by a U.S. district court would end a simmering, three-year legal battle — and a three-year court injunction that has blocked CMS from implementing the new AMP guidelines, saving pharmacies billions of dollars, according to pharmacy groups.

NACDS president and CEO Steve Anderson and NCPA EVP and CEO Kathleen Jaeger hailed the agreement. “Today marks a vital triumph for pharmacy and patients,” they said in a jointly worded statement Tuesday afternoon. “The agreement of CMS to stop applying federal upper limits to all B-rated [generic] drugs after Dec. 15 and to refrain from publishing AMPs calculated under the old AMP rule are the final steps that will allow the AMP lawsuit to be dismissed.”

Both leaders also were buoyed by CMS’ agreement to formally withdraw provisions of the AMP rule related to the definitions of both AMP and what constitutes a “multiple-source drug” as specified in the original regulations the agency proposed for Medicaid prescription reimbursements going forward. CMS also dropped its controversial method of calculating the FUL for generic drug reimbursements.

Those agreements represented “another victory for patient care,” Jaeger and Anderson said. “Combined with withdrawal of most of the AMP rule, these victories eliminate the need for the injunction that halted implementation of the AMP rule. Now that all of the issues raised in our AMP lawsuit have been resolved, there is nothing left to challenge at this time, and we are pleased to have reached agreement with CMS on a motion to dismiss the lawsuit.”

The deal lays to rest a long and bitter disagreement between retail pharmacy and federal health officials over Medicaid pharmacy payments, and eliminates one of the industry’s biggest potential threats to profitability. In the three years that the injunction blocking AMP has been in effect, NACDS and NCPA said, it has “prevented devastating reimbursement cuts from being implemented” and bought the industry time to craft an agreement with CMS.

“Each day that the injunction remained in place resulted in the avoidance of crippling cuts in the amount of $5.5 million per day, for a total of approximately $5.75 billion from Jan. 1, 2008, through today,” Jaeger and Anderson said. “These devastating cuts would very likely have created serious impediments for patients in accessing their medications and other pharmacy services.”

The two leaders also noted that, “in addition to the lawsuit, NCPA and NACDS urged policy-makers to recognize the ability of pharmacies and pharmacists to help improve health and reduce healthcare costs, and are gratified that this sense is reflected in the pharmacy provisions of the new healthcare-reform law. The law included provisions to reduce the AMP cuts and to advance medication therapy management. We look forward to continue working with CMS in the implementation of the new AMP provisions,” both leaders added, “and we will continue advocating energetically for sound public policy that provides access to quality pharmacy services for patients, which prevent more costly forms of health care over the long run.”

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