On September 3, 2010, the Centers for Medicare & Medicaid Services (“CMS”) published a Proposed Rule withdrawing certain provisions of the July 17, 2007 AMP Final Rule, and withdrawing the October 7, 2008 Final Rule defining “Multiple Source Drug.” Specifically, the rule proposes to withdraw 42 C.F.R. § 447.504, “Determination of AMP,” § 447.514, “Upper limits for multiple source drugs,” and the definition of “Multiple Source Drug” in § 447.502. Conforming amendments are also proposed to other sections of the AMP Final Rule, generally by replacing references to the regulatory definition of AMP which is being deleted, with references to the statutory definition of AMP. As the rule explains, the withdrawal is being proposed in light of retail pharmacies’ legal challenges to the definition of AMP and the multiple source drug provisions, and the passage of health care reform amendments which have effectively superseded the AMP provisions.

In the absence of regulatory guidance governing the AMP calculation, CMS advises pharmaceutical manufacturers to base their AMP calculations on the definitions set forth in the statute, as amended by the Patient Protection & Affordable Care Act, the Health Care and Education Reconciliation Act, and the FAA Air Transportation Modernization & Safety Improvement Act (“Transportation Bill”). This presents challenges to manufacturers as they prepare to submit their monthly AMP pricing for October 2010 – the first submission based on the new legislation. The proposed rule notes that CMS expects to develop implementing regulations, but it is unclear whether manufacturers will receive guidance in time for the October submission, which is due on November 30, 2010.

Manufacturers modifying their AMP calculations would be prudent to carefully review the statute as amended, and document their assumptions accordingly. Particular attention should be paid to the “alternate calculation” for “inhalation, infusion, instilled, implanted, and injectable” drugs that are, “not generally dispensed through a retail community pharmacy.”

Comments must be received by CMS no later than 5 p.m., on October 4, 2010. Please contact Vicky G. Gormanly, Joseph W. Metro or Robert J. Hill if you would like further information regarding this Proposed Rule.