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The Social Security Act requires the OIG to notify the HHS Secretary if the average sales price (ASP) for a particular drug exceeds the drug’s AMP or widely available market price (WAMP) by a threshold, currently set at 5%. If that threshold is met, the Secretary is authorized to disregard the drug’s ASP and substitute…

As previously reported, the ACA modified the statutory FUL provisions for Medicaid reimbursement for multiple source drugs. In short, the ACA directs the Secretary to calculate FULs as no less than 175% of the weighted average (determined on the basis of utilization) of the most recently reported monthly average manufacturer prices (AMP), effective October…

Medicare physician fee schedule (MPFS) payments are scheduled to be cut by 27.4% in 2012 under the Centers for Medicare & Medicaid Services’ (CMS) final rule to be published November 28, 2011. The steep reduction is a result of the statutory Sustainable Growth Rate (SGR) formula. While Congress is widely expected to take action…

The OIG has created a “spotlight page” on its website to highlight its reports and findings involving the Medicaid drug rebate program. The page features comparisons of drug spending under Medicaid and Medicare Part D, manufacturer compliance with Average Manufacturer Price reporting requirements, manufacturer development of new versions of existing brand-name drugs to minimize rebate…

A recent OIG report examined drug costs to Medicaid pharmacies and their relation to benchmark prices to inform states as they consider changes to their drug reimbursement methodologies. The OIG concluded that average wholesale price, wholesale acquisition cost, and AMP had consistent relationships with invoice prices for single-source drugs. None of these benchmarks had consistent relationships…

As previously reported, the ACA modified the statutory FUL provisions for Medicaid reimbursement for multiple source drugs. In short, the ACA directs the Secretary to calculate FULs as no less than 175% of the weighted average (determined on the basis of utilization) of the most recently reported monthly average manufacturer prices (AMP), effective October…

The ACA modified the statutory Federal Upper Limit (FUL) provisions pertaining to Medicaid reimbursement for multiple source drugs. Briefly, under the ACA, the Secretary was directed to calculate FULs as no less than 175% of the weighted average (determined on the basis of utilization) of the most recently reported monthly average manufacturer prices (AMP), effective…

On August 4, 2011, CMS held an “External Stakeholders Meeting” at its Baltimore headquarters to discuss the development of a survey for what it is now calling “National Average Drug Acquisition Cost” or “NADAC”. Earlier this year, CMS announced that it would publish a pricing benchmark based upon pharmacies’ acquisition costs for both brand and generic drugs, which State Medicaid programs could use instead of Average Wholesale Price (AWP) or Wholesale Acquisition Cost (WAC) to establish pharmacy reimbursement rates. CMS has entered into a contract with Myers & Stauffer, LC, to develop NADAC; Myers & Stauffer currently collects pharmacy acquisition costs for Oregon and Alabama, two states that have made such costs an element of their Medicaid pharmacy reimbursement.
Continue Reading CMS Discusses Details of New “National Average Drug Acquisition Cost” Survey

On July 8, 2011, CMS announced that it had awarded Myers and Stauffer, LC a contract to prepare a monthly survey of retail community pharmacy (“RCP”) prescription drug prices. The contract is in furtherance of CMS’s commitment to develop and publish “Average Acquisition Cost” data reflecting RCPs’ purchase costs for all covered outpatient drugs, for potential use by State Medicaid agencies in rate-setting.
Continue Reading CMS Awards “Survey of Retail Prices” Contract to Myers and Stauffer – Moves One Step Closer to Average Acquisition Cost

On February 3, 2011, HHS Secretary Kathleen Sebelius sent a letter to state governors identifying several areas of potential cost savings for state Medicaid programs. As part of a discussion regarding “purchasing drugs more efficiently,” Sebelius announced that HHS is undertaking a first-ever national survey to create a database of pharmacies’ actual acquisition costs (“AACs”) for prescription drugs that states may use as a metric to determine state-specific Medicaid reimbursement rates. The results from the survey are expected to be available during 2011.
Continue Reading CMS to Publish Pharmacies’ Actual Acquisition Costs as New Drug Pricing Benchmark

The GAO has released an analysis entitled “Medicaid Outpatient Prescription Drugs: Estimated Changes to Federal Upper Limits Using the Formula under the Patient Protection and Affordable Care Act.” Drawing from 2008 data that pre-dates the ACA changes to the definition of average manufacturer price (AMP), the GAO estimates how, for selected drugs, estimated federal upper…

The ACA requires drug manufacturers to report the total number of units that are used to calculate the monthly average manufacturer price (AMP) for each covered outpatient drug no later than 30 days after the last day of the month. CMS has updated the Medicaid Drug Data Reporting system to enable reporting of AMP units…

On September 28, 2010, the HHS Office of Inspector General (OIG) issued an Advisory Bulletin that notifies drug manufacturers of an OIG enforcement initiative concerning the timely submission of data under the Medicaid Drug Rebate Program, the 340B Drug Pricing Program, the Federal Upper Limit (FUL) Program, and the Medicare Part B outpatient prescription …