- The Center for Medicare and Medicaid Services (CMS) recently held a public meeting to describe how it will conduct its survey of pharmacy price and acquisition costs. CMS may publish its first data file by the end of 2011.
- The Office of Inspector General (OIG) released a survey on how state Medicaid programs are planning to replace First DataBank’s the Average Wholesale Price (AWP) data. Most want to use AAC.
- California reversed course (again) on AAC in Medi-Cal in its latest budget.
Tomorrow, I’ll discuss the potential impacts of AAC on the pharmacy industry.
OIG: STATES ARE STILL MONKEYING AROUND
As many of you know, First DataBank (FDB) plans to stop publishing AWP data in September, although other companies will continue publishing this benchmark.
The OIG recently released Replacing Average Wholesale Price: Medicaid Drug Payment Policy, a survey report on how state Medicaid plans will deal with the impending extinction of FDB’s AWP data. The survey was conducted in January 2011.
Here’s what they found from the 45 states still using AWP data from First DataBank:
- 20 states had “not developed any definitive plans” despite getting AWP data from First DataBank. Way to plan ahead, folks!
- 3 states plan to replace AWP with Actual Acquisition Cost (AAC)
- 12 states plan to replace AWP with Wholesale Acquisition Cost (WAC), an alternative published list price that has the advantage of being defined legally in the Social Security Act
- 10 states are sticking with AWP, but are or will use another vendor to get the data
Most States (44 of 51) would prefer that CMS develop a single national benchmark to set Medicaid reimbursement rates. Twenty-four States specified that they want a benchmark based on pharmacy acquisition costs.This finding brings us to…
CMS: KING KONG ROARS
In July, I noted that that CMS is moving ahead with a pharmacy acquisition cost survey. For the newly-released details, get your paws on the August 4, 2011 Stakeholders Meeting Presentation.
The slides explain how Myers and Stauffer will conduct the National Average Drug Acquisition Cost (NADAC). The objectives of the NADAC (per page 7):
- Determine the national average cost that retail pharmacies pay to acquire drugs (Independent, chain, or specialty)
- Evaluate geographic, chain and independent, rural and urban cost variations
- Publish a monthly reference file to assist State Medicaid Pharmacy Programs in evaluating their existing reimbursement methodology
CALIFORNIA: A CHIMP OFF THE OLD BLOCK
California is once again swinging ahead with its own AAC plans.
I’ve been tracking the AAC debate in California, from the initial proposal (California Medi-Cal Joins the Cost-Plus Revolution) to its rejection (Update: CA Medi-Cal Backs Away from Cost-Plus).
I don’t know what happened beneath the planet of the AACs, but detailed AAC implementation language ended up in California Assembly Bill 201 (AB-102), which was approved by Governor Brown in late June. The relevant regulations are on pages 18 to 24 of the PDF.
In particular, page 20 indicates that California pharmacies will receive ingredient cost reimbursement for both brand and generic drugs at the lowest of:
- Average Wholesale Price (AWP) minus 17 percent
- Average Acquisition Cost
- Federal Upper Limit
- MAIC (Maximum allowable ingredient cost)
(C) Average wholesale price shall not be used to establish the estimated acquisition cost once the department has determined that the average acquisition cost methodology has been fully implemented.AND ON A PERSONAL NOTE…
I saw Rise of the Planet of the Apes last weekend. It’s an entertaining and fun night at the movies, although I disliked the (yawn) “evil pharmaceutical executive” stereotype.
I was stunned to find myself as the only person in the theater who laughed (or even reacted) when a character snuck in the iconic line: “Get your hands off me, you damn dirty ape!”
Oh well, just another depressing sign of my age and/or geekiness!