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Reasonable Assumptions in Manufacturer AMP Reporting

For Federal payments to be available for covered outpatient drugs provided under Medicaid, drug manufacturers are generally required to enter into rebate agreements with the Secretary of HHS and pay quarterly rebates to States. Under the Medicaid Drug Rebate Program, drug manufacturers must provide the Centers for Medicare & Medicaid Services (CMS) with the average manufacturer price (AMP) and, if applicable, best price (BP) for each of their covered outpatient drugs. The complexities of industry practices and the absence of specific guidance can present difficulties for manufacturers when calculating AMPs and BPs. CMS’s recent Medicaid covered outpatient drugs final rule offers substantial guidance to manufacturers, but it likely does not provide complete clarity for every situation. As outlined in the rebate agreement, CMS permits manufacturers to make “reasonable assumptions” under certain circumstances when calculating AMPs and BPs. Manufacturers must document their assumptions, but they are not required to submit them to CMS. In response to a Congressional request, we will estimate how many manufacturers make such assumptions and identify the major issues for which assumptions are being made. We will also examine CMS’s oversight of the reasonable-assumptions process and explore whether manufacturers believe that CMS’s recent final rule clarified issues for which manufacturers previously made assumptions.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
Jun-17 Centers for Medicare & Medicaid Services Reasonable Assumptions in Manufacturer AMP Reporting Office of Evaluation and Inspections OEI-12-17-00130 2018

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