Monday, August 06, 2012

Drug Price Types and Options For A Future Standard

I am pleased to welcome Elsevier/Gold Standard as a Drug Channels sponsor.

Anyone interested in pharmacy reimbursement and economics should download and read their new white paper: Drug Price Types and Options For A Future Standard. (Free with registration.) It reviews and compares 10 of your favorite price benchmarks, including AWP, AMP, NADAC, and more.

The paper also describes Predictive Acquisition Cost (PAC), a new drug price developed by Glass Box Analytics and distributed by Elsevier/Gold Standard. The companies claim PAC comes closer to a pharmacy's true acquisition cost than those 10 alternatives, making PAC a candidate for an industry-wide standard. (See below or read the white paper.)

While I can't yet vouch for the claims summarized below, I'm certainly intrigued.


Standardized price information is a vital part of the drug purchasing/supply system. Visibility into true acquisition cost is the first step to containing prescription drug costs. Until now, the lack of transparency has made tracking drug acquisition costs all but impossible. But a new drug price type, Predictive Acquisition Cost (PAC), developed by Glass Box Analytics and distributed by Elsevier/Gold Standard, tracks true acquisition cost more closely than Average Wholesale Price (AWP) or any other existing or proposed price type.

PAC leverages proven concepts from other industries and applies the power of predictive analytics to drug pricing. By using various factors associated with the cost of a drug, PAC deploys a multi-dimensional predictive analytics model to track the acquisition cost of drugs with sufficient accuracy to support pricing activity. The statistical model is trained to synthesize various known attributes into an overall estimation of acquisition cost.

Independent tests show that PAC comes closer to true acquisition cost than alternatives. PAC meets all the criteria for becoming the industry-wide standard:
  1. Transparency – PAC is transparent and has a genuine relation to the actual acquisition costs of drugs.
  2. Accessibility – PAC is designed to be distributed to all parties in the pharmaceutical supply chain, and can be used for both drug pricing analytics and as a daily contract negotiation benchmark.
  3. Comprehensiveness – PAC supports brands and generics, including single-source generics.
  4. Timeliness – PAC adjusts as soon as any of the input factors adjust and synthesizes all relevant information available to it at any point in time.
  5. Immune to manipulation – PAC is immune to manipulation by design, and maintains a robust monitoring system to detect any unusual movements in the factors of attempts at manipulation.
  6. Administratively simple – Lastly, PAC is simple to administer.
Prevent over-paying, contain costs, and ultimately provide better health benefits using PAC, the only drug price type that meets all of the industry-defined criteria for a new drug price benchmark.

Read the PAC white paper to learn more.

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