Average manufacturer price (AMP)
What is the average manufacturer price (AMP)?
The AMP is the average amount paid to manufacturers by wholesalers and retail community pharmacies who purchase directly from the manufacturer.
The Medicaid rebate for brand name drugs is 23.1% of the AMP or the difference between the AMP and the best price (BP) per unit—whichever is greater. As for generics, the generic drug rebate is 13% of the AMP.
Drug manufacturers are required to report AMP data for all drugs covered by Medicare to the CMS quarterly.
What is the AMP used for?
The AMP is used to calculate drug rebates for the Medicaid Drug Rebate Program (MDRP). The AMP is used to ensure that rebates are based on the actual amount manufacturers pay, not the reported retail price, which is often higher since it does not account for discounts.
The MDRP requires a drug manufacturer to rebate a specified portion of the Medicaid payment for the drug to the states, which is then shared with the federal government. In exchange for this rebate, Medicaid programs cover nearly all of the FDA-approved drugs by the manufacturer, and the drugs are eligible for federal matching funds.