Comments on Drug Channels: What Happens When AWP Goes Boom?

I reviewed a client’s “equivalency” calculation ex...

2009-09-11T11:53:41.934-04:00

I reviewed a client’s “equivalency” calculation exhibits provided by one of the major PBMs and found many errors.

I urge organizations to review these reports before agreeing to PBM-proposed changes in discounts from AWP. Larger organizations may want to audit PBM calculations based on their raw claims data.

FYI, here is today's official announcement fro...

2009-09-10T20:21:35.442-04:00

FYI, here is today's official announcement from the main law firm in the case: Major Rollback of Pharmaceutical Bench Mark Prices Approved By Federal Court of Appeals.

Adam

I know that many are now looking to WAC to become ...

2009-09-10T17:09:44.642-04:00

I know that many are now looking to WAC to become the new pharmacy benchmark. However, what's to stop a manufacturer from increasing WAC arbitrarily to maintain pharmacy margins?

WAC is just a list price and, as I understand it, not really tied to what a retail pharmacy pays for the drugs. If I'm a manufacturer and I want a pharmacy or a clinic to dispense my product, why wouldn't I raise my WAC while simultaneously increasing the discounts available to the channels?

Your point is right on, Adam -- WAC is just more of the same, and we need a viable alternative based on real data.

2 great posts in 2 days - I guess you couldn't...

2009-09-10T15:30:38.041-04:00

2 great posts in 2 days - I guess you couldn't wait to get back!

Re: the declining AWP discount over time Keep in ...

2009-09-10T12:12:33.250-04:00

Re: the declining AWP discount over time

Keep in mind that AWP has been rising by 5-10% per year. A smaller percentage of a bigger number means more dollars for pharmacies. When I pointed this fact out last year (with computations), pharmacy owners went ballistic in the comments. See Pharmacy Profits & PBM Contracts and the comments from readers.

Adam

Humana and Aetna are using this settlement as an e...

2009-09-10T12:02:19.292-04:00

Humana and Aetna are using this settlement as an excuse to slash reimbursement to pharmacies. Their adjusted reimbursement rate does not even come close to being equivalent to the pre-settlement reimbursement, at least on independents contracts Now on the PBM front, who is overseeing to ensure that PBms do not use this as an opportunity to stick it to the health plans? More lawsuits in the future?

“[T]hese pharmacies … were unjustly enriched when ...

2009-09-10T11:13:22.996-04:00

“[T]hese pharmacies … were unjustly enriched when drug prices were fraudulently inflated during the scheme, yet they have not been asked to disgorge their profits.”

Hmmm....let's now go back and do a little review on the state of drug store PBM reimbursement from 1995 to current.

1995: Average AWP discount was 11% plus $4.00 fee.

2000: AAWP discount was 13% plus $3.00 fee.

2005: AAWP discount was 15% plus $2.50 fee.

2009: AAWP disc is 16% plus $2.00 fee.

It seems to me that the "unjustly enriched" drugstore reimbursement market actually did an "automatic adjustment" without the help of Uncle Sam.

Shocking, but it seems like the concept of competition actually works in America.

He giveth, and taketh away. And it all washes out in the end!

Thanks Adam.