The problem is the non-purchase side. The non-purchase side of the business is where rebates and fees are paid. Most of the agreements are quarterly. A typical turnaround is 60 days after the quarter. And then, as a manufacturer, I've got to reconcile that, which may take another 30 days.

So if I've got a rebate that was paid on a January 5th transaction, I may not know definitively what it is until July.

CLINTON: And when do you have to file the January report?

HEPBURN: So how do you estimate that? On a quarterly basis, we do some estimation. As it gets to monthly, it gets even more difficult.

ZOCCHI: Clearly, the resources applied to this particular problem are going to go up dramatically. When you go from quarterly to monthly reporting of AMP and best price, companies go from eight submissions to 32. Their workload increases tremendously—and we're not even talking about getting the information or selecting a way to produce that information because you'll have to make some estimates for a monthly AMP.

WINTERTON: Just to make it practical, one of my clients has a situation where it currently takes them 36 days to do their AMP calculation. The AMP calculation is due in 30 days. The way they get those extra six days is, starting the second weekend of the month, everybody comes in and works on the weekends. That's in a quarterly environment. But there is absolutely no room to maneuver when you're going from one calculation in a quarter to four—there are just not enough days.

CLINTON: What's the motivation of the wholesalers and retailers to play along and provide data more promptly?

WINTERTON: Without a fundamental redefinition of the purchase/non-purchase model, it's not a matter of cooperation—it's a matter of the business model. And the business model doesn't support the required calculations. It's a disconnect between the way the industry works and what's being required by the government.

CLINTON: So what should companies do internally? What kinds of systems or procedures or personnel should they put into place to let them get at least close to complying with the regulations?

SHRIGLEY: There's never really been any enforcement with regard to the quarterly AMP. Lots of manufacturers do not report their AMPs on time. All [the government] does is call you up and say, "Where's your AMP?"

I don't understand the motivation for the monthly reporting. Why is a monthly AMP better than a quarterly AMP for reimbursement?

PAVING THE BUMPY ROAD AHEAD

CLINTON: Is the monthly report more about enabling the government to fine-tune reimbursements and rebates, or is it about increasing transparency—especially the kind that shows variability so that there's more pressure on prices?

HEPBURN: All of those things.

WINTERTON: I think it's in the best interest of all parties—the government, the pharmacy, and the pharmaceutical manufacturer—to have a stable reimbursement basis.

It's better for the pharmacy because they know what they're going to pay and what they're going to get reimbursed. It's better for Medicaid because AMP is not bouncing all over the place. And it's better for the manufacturer because customers aren't making decisions based on price fluctuations.

The AMP should be kept as stable as possible. But it's unclear that monthly reporting achieves that stability. Quarterly would be more stable and as representative. But that's not what was written in the law.