MMA update

Monday, May 31, 2004

WASHINGTON - Critics of the transition from an AWP to ASP reimbursement for respiratory medications aired their concerns at a CMS Open Door Forum April 20, just 10 days ahead of the date that manufacturers were to begin submitting sales data to CMS.

Comments and questions centered on manufacturer submission requirements, but issues quickly surfaced on the requirements’ eventual impact on respiratory providers.

Most providers do not purchase drugs direct from the manufacturer, and wholesalers have free rein to mark-up prices to providers, which could eliminate the already slim 6% margin mandated by the MMA.

“The wholesalers are under no restraint as to what price they are going to resell the product to me at,” said Associated Healthcare President Don White. “My limitation in ASP plus 6%, but if I’m buying from a wholesaler then I’m dead in the water. It is very unlikely there will be any margin at all for me to operate on.

CMS is only collecting data on drug manufacturer’s prices to wholesalers and providers, said CMS officials during the forum. That information will directly determine the reimbursement for Part B drugs starting in 2005.

This could further handicap respiratory providers who purchase drugs from wholesalers when the ASP takes effect.

“Someone buying from a wholesaler could possibly be paying more than the government allows for the drug,” said an industry source. “In which case you would be hard pressed to find anyone to distribute it.”

However, with a profit margin of just 6% over ASP, providers who generate enough volume to buy direct from the drug manufacturer say they too may exit the market.