In other words, is AWP an ex-benchmark?
Definitely. Maybe. Perhaps not. Here’s a quick update along with links to some helpful resources.
OUR STORY SO FAR
First Databank allegedly increased the spread between Wholesale Acquisition Cost (
U.S. District Judge Patti B. Saris gave preliminary approval to a legal settlement in June 2007. There were two important elements of the settlement with regard to the publication of AWP:
- The WAC-to-AWP spread would be rolled back to 1.20 (if an NDC’s spread was higher) for all drugs
- FDB would stop publishing AWP no more than 2 years after the final court order
Since AWP is still widely used as a drug reimbursement benchmark for pharmacies, this proposed settlement affected the economics of many providers that were not involved in the lawsuit or settlement. In particular, pharmacy associations objected to the proposed class settlement, including the Pharmaceutical Care Management Association (PCMA), the National Community Pharmacists Association (NCPA), the National Association of Chain Drug Stores (NACDS) and the Food Marketing Institute (FMI).
In January 2008, Judge Saris rejected the original settlement and requested that the parties come back with a new settlement plan. An amended settlement was filed in June 2008 in which First Databank would roll back the AWP-to-
However, the amended (and still unapproved) settlement does not require First Databank to stop publishing AWP or roll back AWP on all drugs. Nonetheless, FDB has announced that it will unilaterally roll back the AWP for all drugs to 1.20 and discontinue publishing the Blue Book AWP data independent of the litigation. (See the June 2 letter on its website.) So the outcome would be the same (no more published AWP) although the currently proposed settlement does not technically require the demise of AWP.
- AWP may not be quite dead yet, but it is certainly pining for the fjords (as discussed in the video below). For instance, other AWP lawsuits unrelated to FDB have created legal “speed limits” for the WAC-to-AWP markup. (See Judge Saris on Fictitious AWPs.)
- Alternative list price benchmarks, such as
WAC, are likely to become more common. Example: the Department of Defense’s TRICARE contract that I discuss in Big WAC Attack.
- Where possible, pharmacy reimbursement relationships will be structured to maintain dollar-based economic arrangements regardless of the benchmark. Medco Health Solutions (MHS) discussed this issue in November. (See PBMs and AMP.)
- Computed (non-list price) benchmarks such as Average Manufacturer Price (AMP) could one day become the norm for retail pharmacy, but the legal and publication status of AMP makes the timing very uncertain. (See my many posts on AMP for more.)
- FDB AWP Communications
- FDB/Medi-Span AWP Settlement Website
- Hagens Berman Sobol Shapiro (court documents)
AND NOW FOR SOMETHING COMPLETELY DIFFERENT
Special thanks to John Cleese and Michael Palin for this video overview of AWP’s legal status: