Draft Affordable Care Act Federal Upper Limits

The Affordable Care Act modified the previous statutory provisions that required the Secretary to establish a Federal Upper Limit (FUL) for multiple source drugs. Effective October 1, 2010, the Social Security Act was revised to require that the Secretary calculate a FUL as no less than 175 percent of the weighted average (determined on the basis of utilization) of the most recently reported monthly average manufacturer prices (AMP) for pharmaceutically and therapeutically equivalent multiple source drug products that are available for purchase by retail community pharmacies on a nationwide basis. In order to facilitate this change, the Centers for Medicare & Medicaid Services (CMS) issued draft AMP-based FUL reimbursement files (for review and comment only) for multiple source drugs, including the draft methodology used to calculate the FULs. These draft AMP-based FUL prices are based on the most recently reported monthly AMP and AMP unit data.

We are not posting monthly AMPs for individual drugs on any of the draft FUL files.  Rather, we are posting the weighted average of monthly AMPs in a FUL group. Below are the links to the draft monthly AMP-based FUL files and the updated draft Methodology and Data Elements Guide.  Please note that we are now posting the current month and the three previous months of the monthly draft AMP-based FUL files.

Draft Affordable Care Act Federal Upper Limit Methodology and Data Elements Guide [PDF]

• Draft October 2012 FULs [ZIP]
• Archived - DRAFT - AMP/Based FULs - 2012 [ZIP]
• Archived - DRAFT - AMP/Based FULs - 2011 [ZIP]

Draft Three-Month Rolling Average Federal Upper Limits

We have received comments that the draft AMP-based FULs fluctuate on a month-to-month basis and that these fluctuations may create problems for pharmacies because they will be unable to predict resulting state reimbursement rates. In response to those comments, we have developed a draft three-month rolling average FUL consisting of the weighted average of the current and two previous monthly draft AMP-based FULs.  We are posting the three-month rolling average FUL reimbursement files in draft, for review and comment only, beginning with the July 2012 draft, and the draft methodology used to calculate the draft three-month rolling average FUL.  Below are the links to the draft three-month rolling average FUL files and the draft Methodology and Data Elements Guide.  

Draft Affordable Care Act Three-Month Rolling Average Methodology and Data Elements Guide (PDF)

• Draft October 2012 Three-Month Rolling Average FULs [ZIP]
• Archived - DRAFT - Three-Month Rolling Average FULs [ZIP]

We encourage review and comment on all aspects of the draft three-month rolling average FULs, and we note the following two issues.  First, we are providing a draft three-month rolling average FUL only where we have three months (current and two previous months) of manufacturer reported and certified data for the applicable multiple source drugs.  Therefore, there may not be an exact match, and in some cases a fewer number of drug groups with a draft three-month rolling average FUL, compared to the draft AMP-based FUL.  Second, while we expect the draft three-month rolling average FUL to fluctuate to a lesser degree from month-to-month compared to the fluctuations we have observed in the draft monthly AMP-based FUL,  the draft three-month rolling average FULs incorporates pricing data older than the current monthly pricing that may be less reflective of pharmacies’ current purchase prices.   

We will continue to accept comments on the draft AMP-based FULs and the methodology used to calculate them and accept comments on the draft three-month rolling average FULs and the methodology used to calculate them.  Please submit your comments to FUL@cms.hhs.gov. We will consider all comments received; however, we will not respond to individual comments.

After we consider comments on the draft monthly AMP-based FUL and the draft three-month rolling average FUL files, the draft National Average Retail Price (NARP) files, the draft National Average Drug Acquisition Cost (NADAC) files and the draft Monthly New Drug Report, we plan to release these data files in final, with updated files posted on at least a monthly basis.  States can use the draft monthly AMP-based FUL, or the draft three-month rolling average FUL, once they are finalized, depending on the approved state plan, to develop a pharmacy reimbursement methodology that will allow their pharmacy payments to remain within the FUL in the aggregate.    

We also anticipate that states may consider whether to reimburse at the draft NADAC, available through the survey of retail prices, once finalized, for drugs subject to the FULs.  We seek comments on that as well.  Any state that wishes to change its pharmacy reimbursement methodology will need to submit a state plan amendment to CMS for review and approval. 

Once we publish the final AMP-based FULs, the prior FULs calculated using the methodology at 42 CFR 447.332 (FUL Changes Made to Transmittal No.37 and Transmittal No.37 - FUL November 20, 2001), as in effect on December 31, 2006, under the authority of the Medicare Improvements for Patients and Providers Act of 2008 will no longer be in effect.

Federal Upper Limits Prior to the Affordable Care Act

In 1987, regulations limited the amount which Medicaid could reimburse for drugs with available generic drugs under the Federal Upper Limit (FUL) Program. These limits are intended to assure that the Federal government acts as a prudent buyer of drugs. The concept of the upper limits program is to achieve savings by taking advantage of the current market prices.

Effective December 15, 2010, CMS no longer applied the FULs to B-rated drugs.

Page last updated on February 7, 2013