Court Enjoins Average Manufacturer Price Rule

December 21, 2007

We previously reported that two pharmacy associations were challenging the implementation of a rule promulgated by the Centers for Medicare & Medicaid Services (“CMS”) setting forth how to calculate the Average Manufacturer Price (“AMP”), the new, and importantly lower, benchmark for pharmaceutical reimbursement by Medicaid. 

Finding that the plaintiffs had met the requirements to obtain a preliminary injunction, Judge Lamberth of the United States District Court for the District of Columbia held earlier this week that (1) plaintiffs were likely to succeed on the merits of their claim because the rule did not appear to follow either the “statutory definition of ‘average manufacturer price’ or the statutory definition of ‘multiple source drug,’” (2) the inadequate reimbursement plaintiffs members would receive under the new rule would force the member pharmacies to reduce hours and services or leave the Medicaid program – causing irreparable harm to the pharmacies, (3) this harm outweighs any potential harm to the government, and (4) it is in the public interest for agencies to comply with the law and Medicaid beneficiaries to obtain access to local pharmacies.

Based on these findings, the court enjoined the government from taking any action to implement the rule, although the government may continue to require drug manufacturers to make the calculations used to determine the rebates paid to states under the Medicaid program.  The court also enjoined the government from posting any AMP data online or disclosing the data to any entity except that the U.S. Department of Health and Human Services can distribute the data internally within the department and also to the U.S. Department of Justice for enforcement use.

Categories: Reimbursement