5i products (which is now what the language from H.R. 1586 is being called for those drugs that are inhalation, infusion, instilled, implanted or injection) will create various issues that you must sit down and think about. What about specialty pharmacies? With the pharmacy groups saying that specialties are not retail pharmacies, do pill versions of drug dispensed through the specialty pharmacy fall under the traditional AMP calculation or does it now fall under the 5i AMP rule?
And how should the “general” wording in the 5i rule be interpreted? Many people are looking to the VA 90/10 rule to set a percentage number to their amount of sales that are attributed to non-retail community pharmacies. That is a good start except that the VA rule specifically states (without the word “general”) that this is for sales through merchant middlemen (wholesalers). So, do you exclude all sales EXCEPT those to wholesalers when trying to determine your general sales percentage for the 5i AMP? Or is it all sales?
The Part B regulation is another option as it also has language on the types of sales; however that language states that it is generally 50%. So, what to manufactures do once they have diligently gone through all their sales and identified how they should be treated? At this point we are all still waiting for the clarification on this issue. Realistically there are many potential answers: is the mix 90/10, is it 75/25, it is 50/50, or can we expect anything being a majority with at least 51% of the sales?
Unfortunately at this point it is down to interpretation and there is no current direction as to how those interpretations should be made. Be sure to think through all the options and prepare your data identification for inclusion/exclusion… and stay tuned!
Rick Zimmerer, Partner – KPMG
5i products (which is now what the language from H.R. 1586 is being called for those drugs that are inhalation, infusion, instilled, implanted or injection) will create various issues that you must sit down and think about. What about specialty pharmacies? With the pharmacy groups saying that specialties are not retail pharmacies, do pill versions of drug dispensed through the specialty pharmacy fall under the traditional AMP calculation or does it now fall under the 5i AMP rule?
And how should the “general” wording in the 5i rule be interpreted? Many people are looking to the VA 90/10 rule to set a percentage number to their amount of sales that are attributed to non-retail community pharmacies. That is a good start except that the VA rule specifically states (without the word “general”) that this is for sales through merchant middlemen (wholesalers). So, do you exclude all sales EXCEPT those to wholesalers when trying to determine your general sales percentage for the 5i AMP? Or is it all sales?
The Part B regulation is another option as it also has language on the types of sales; however that language states that it is generally 50%. So, what to manufactures do once they have diligently gone through all their sales and identified how they should be treated? At this point we are all still waiting for the clarification on this issue. Realistically there are many potential answers: is the mix 90/10, is it 75/25, it is 50/50, or can we expect anything being a majority with at least 51% of the sales?
Unfortunately at this point it is down to interpretation and there is no current direction as to how those interpretations should be made. Be sure to think through all the options and prepare your data identification for inclusion/exclusion… and stay tuned!