NGA Applauds Judge's Decision to Stop AMP Rule

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NGA Applauds Judge's Decision to Stop AMP Rule

ARLINGTON, Va. - The National Grocers Association yesterday called a judge's decision to stomp down the government's much aligned Average Manufacturer Price (AMP) rule "a major victory for the retail pharmacy industry."

Fellow trade organizations the National Association of Chain Drug Stores and National Community Pharmacists Association this week won a preliminary injunction in court that stopped the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medical Services (CMS) from implementing the AMP rule, which was scheduled to take effect in January 2008.

On Dec. 19, Judge Royce Lamberth, U.S. District for District of Columbia, found the associations' move to stop the rule are likely to succeed on its merits, that the government violated the Administrative Procedure Act because the AMP rule does not comply with the statutory definition of "average manufacturer price" or "multiple source drug." The rule's opponents charged that it would have forced pharmacies to under charge for many Medicaid drugs.

The judge also found thousands of pharmacies are likely to suffer irreparable harm if the rule took effect by being forced into reduced hours and services, out of the Medicaid program, or eventually close their operation.

"The legal action taken by the two associations is commendable because of its importance to the entire pharmacy industry, including NGA's grocery retailers that operate pharmacies," said NGA s.v.p. and general counsel Thomas Wenning. "The AMP rule would force the pharmacies to sell Medicaid drugs at 36 percent below acquisition costs. The judge's decision was consistent with comments NGA had filed with CMS in February 2007 and the House Small Business Committee in July 2007 on the adverse effects and irreparable harm it would cause to retail grocers with pharmacy operations."

Even though HHS has 60 days to appeal the decision, the judge's issuance of a preliminary injunction is expected to cause CMS to reconsider the rule, according to NGA. The decision also adds support for the pharmacy associations and NGA's legislative efforts to pass H.R. 3140, Saving Our Community Pharmacies Act of 2007, and S. 1951, The Fair Medicaid Drug Payment Act of 2007 that would overturn and fix the AMP rule.