Average Manufacturer Price (AMP)

Key facts

Legal basis

Social Security Act Section 1927(k)(1)

Regulation

42 CFR 447.504

Reported

Monthly and quarterly by Medicaid Drug Rebate Program manufacturers

Confidentiality

Manufacturer-specific AMP is confidential under federal law

Used for

Medicaid unit rebate amounts, 340B ceiling prices and Federal Upper Limits

What is Average Manufacturer Price?

AMP measures what a manufacturer receives for drugs that reach retail community pharmacies, either through wholesalers or by direct sale. Every manufacturer with a Medicaid national drug rebate agreement must calculate and report AMP for each covered outpatient drug at the National Drug Code (NDC) level.

The Affordable Care Act of 2010 revised the definition, and CMS implemented the changes in the 2016 Covered Outpatient Drugs final rule. The law and rule also define a separate calculation, often called 5i AMP, for inhalation, infusion, instilled, implanted and injectable drugs that are not generally dispensed through retail community pharmacies.

How AMP is calculated

AMP starts with sales into the retail community pharmacy channel and nets out certain price concessions:

• Included: sales to wholesalers for drugs distributed to retail community pharmacies and direct sales to those pharmacies, net of discounts and rebates provided to them.
• Excluded: customary prompt pay discounts to wholesalers, bona fide service fees, 340B and federal sales, and rebates paid to pharmacy benefit managers and insurers.
• Timing: monthly AMP is due within 30 days after each month ends, and quarterly AMP within 30 days after each quarter ends.

Why AMP matters

AMP drives several federal price calculations even though it is not public:

Since January 1, 2024, the Medicaid rebate is no longer capped at 100 percent of AMP, following the American Rescue Plan Act of 2021. As a result, a drug with large cumulative price increases can owe a rebate larger than its AMP.

• Medicaid basic rebate: for most brand drugs, the greater of 23.1 percent of AMP or AMP minus Best Price, and for generics, 13 percent of AMP.
• Inflation rebate: an additional Medicaid rebate applies when AMP rises faster than the Consumer Price Index for All Urban Consumers (CPI-U).
• 340B ceiling price: AMP minus the Medicaid unit rebate amount.
• Federal Upper Limits: CMS sets them using a weighted average of monthly AMPs for equivalent multiple source drugs.