Implications
NACDS and FMI filed another brief in opposition to the controversial proposed First Databank settlement, although they overstate their arguments in a few places. I expect this battle to heat up over the next month as we get closer to the late December hearing about First Databank’s settlement. This hearing represents another blow to the use of Average Wholesale Price (AWP) as a reimbursement benchmark for pharmaceuticals.
Analysis
First Databank (FDB) allegedly increased the spread between Wholesale Acquisition Cost (WAC) and Average Wholesale Price (AWP) from 1.20 to 1.25 on certain drugs in 2002. An amended settlement was filed in June 2008 in which First Databank would roll back the AWP-to-WAC markup only for the subset of about 1,400 drugs identified in the original complaint, among other actions. However, FDB 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.
Pharmacy groups object because any roll-back would translate into lost dollars for pharmacies that get reimbursed based on AWP. The National Association of Chain Drug Stores and the Food Marketing Institute recently filed a new brief and economic report opposing the amended June settlement. Their economic report suggests that reimbursement relationships will be restructured to maintain dollar-based economic arrangements regardless of the benchmark.
The latest legal brief from NACDS and FMI perhaps overstates the Life Without AWP issue when it says “no one has any idea as to what type of pricing benchmark will succeed it.” Other plausible benchmarks include Wholesale Acquisition Cost (WAC), Average Manufacturer Price (AMP), or cost plus reimbursements such as the Wal-Mart (WMT) / Caterpillar (CAT) arrangement. See New Details on WMT-CAT Pharmacy Deal (Council site).
Note that the First Databank settlement is separate from McKesson's (MCK) recently announced settlement. See McKesson settlement is next step in the demise of AWP (Council site).
