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GAO Finds Aggregate ACA-Based FUL Amount Similar to Drug Acquisition Costs, but Recommends Continued CMS Monitoring

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The Government Accountability Office (GAO) released a report comparing ACA-based federal upper limit (FUL) amounts to National Average Drug Acquisition Cost (NADAC) amounts for 1,035 Medicaid-reimbursed outpatient drugs.

GAO used data from Q1 2013 and found that in aggregate the ACA-based FUL amount was approximately 1.4 percent lower than the total NADAC amount. At the individual drug level, however, the ACA-based FUL ranged from 96 percent lower than the NADAC to 404 percent higher than the NADAC for the same drug. For a subset of 50 drugs that account for the highest Medicaid expenditures, the ACA-based FULs were slightly lower than the NADAC, while for the 50 drugs with the highest utilization, the ACA-based FUL and NADAC amounts were comparable.

GAO also found that the aggregate ACA-based FUL amount for generics was 19 percent higher than the aggregate NADAC amount and for branded generics it was 26 percent lower than the total NADAC amount for the same drugs. GAO ultimately recommended CMS to expeditiously implement the ACA-based FULs given the more reflective relationship with actual pharmacy acquisition costs and continue to monitor how the ACA-based FULs compare to the NADACs. CMS concurred with the recommendations.

The report provides an important comparison between the AMP-based FULs, which CMS has proposed to implement in July of this year, and pharmacy-acquisition costs. Stakeholders may raise concerns in cases where FULs fall below NADACs for particular products (such as branded drugs) or particular pharmacies, where pharmacies may not be able to recover acquisition costs under FUL-based reimbursement. However, lack of inclusion of certain discounts in the NADACs is likely to temper this issue and potential access concerns.

CMS is expected to release the final AMP-rule in May with new AMP-based FULs to follow in July.

To view GAO’s report, click here.

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