In case you missed it, Judge Patti Saris recently entered damages in the Average Wholesale Price (AWP) litigation against Astra-Zeneca and Bristol Myers Squibb. Both companies plan to appeal. Good coverage in Pharmalot: Foxes In The Chicken Coop Pay Big Fines.
I think the prospects for more AWP litigation are very high, especially after reading her latest decision. I also believe that Judge Saris' comments will effectively end the consideration of alternate "list price" pharmacy reimbursement models such as Wholesale Acquisition Cost (WAC).
I discussed her original ruling last June in Comments on the AWP Decision, so the damages are just an incremental piece of bad news for the AWP benchmark. In the new decision, Judge Saris wrote:
- “The overwhelming evidence at trial established that AWPs are fictitious and are rarely, if ever, prices paid by doctors for PADs or by pharmacies for [self administered drugs or SADs].”
- “I conclude that defendants’ conduct was both knowing and willful because they knew that Medicare beneficiaries, and thus their insurers, were locked by statute into paying 20 percent of grossly inflated AWPs, which bore no relation to any average of wholesale prices in the marketplace.”
I wonder how much longer AWP will remain as the primary benchmark for Part D plans. Per the report cited in Part D + AMP = Trouble, the average pharmacy payment from Part D insurers = AWP-15% + $2.10.
What about WAC?
Some people have suggested that Wholesale Acquisition Cost (WAC) could replace AWP as a pricing benchmark. WAC is the manufacturer's list price to drug to wholesalers or direct purchasers, excluding any discounts. NACDS has proposed WAC-based reimbursement for brand drugs in June 2005 Congressional testimony, a position the association reiterated in its February 2007 comments about AMP to CMS.
However, WAC is not a computed transactional price like AMP and therefore is subject to the exact same criticisms and problems of AWP. In fact, the First DataBank AWP case revolves around an alleged increase in the mathematical relationship between WAC and AWP.
Obligatory AMP reference
And don’t forget that the AWP litigation bandwagon is just getting started. Iowa was the latest state to hop onboard and sue pharmaceutical companies over drug prices:
“Iowa Attorney General Tom Miller announced Tuesday [Oct. 9] that the state has filed a lawsuit against 78 pharmaceutical companies, alleging the companies inflated drug prices for Medicaid patients, costing the state millions of dollars over several years…Miller said pharmacists also ended up benefiting financially from the inflated prices for Medicaid drugs in the scheme.”
Wait a minute! What did he say about pharmacies? Pharmacies benefited financially from AWP reimbursement under Medicaid?!?
Looks like I just discovered another reason to ban AMP!
Thanks to Pharmalot for the wholesale graphic. He gave me a really good discount off list...