Magazine article Drug Topics

The AWP Litigation Rollercoaster Rumbles On

Magazine article Drug Topics

The AWP Litigation Rollercoaster Rumbles On

Article excerpt

What the next twists and turns will bring

Saturday, September 26, 2009, marks an important day with respect to pharmacy drug reimbursement and drug pricing information.

In the aftermath of a class-action lawsuit brought against First DataBank (FDB) and McKesson Corporation by a third-party payor class accusing the two companies of conspiring to inflate the average wholesale price (AWP) of hundreds of drugs, there will be a rollback of AWP values from 1.25 to 1.20 times the wholesale acquisition cost (WAC) of such drugs.

This represents one part of the settlement that was struck between the litigation parties, but its effect on existing drug pricing contracts between network pharmacies and pharmacy benefit managers (PBMs) will be fax-reaching.

Beyond the rollback of AWP values for the approximately 1400 national drug codes that were the subject of the litigation, other voluntary changes will be implemented by FDB.

Among them, FDB will also take steps to apply the 1.20 factor to all other National Drug Codes whose AWP is based on a markup factor greater than 1.20.

Finally, FDB has stated that it will discontinue publication of AWP information within two years of the September 26, 2009 rollback. Although FDB is likely to continue to publish other metrics, a search for a replacement value of AWP is being considered to sustain a benchmark by which drug pricing can be fairly measured.

On its face, the effect of the rollback will be a cost savings to parties that offer prescription drug benefits. Nevertheless, PBMs acting on behalf of payors may make immediate contract adjustments with network pharmacies in order to continue the economic structure of existing contracts that may be disrupted by the rollback as a consequence of the FDB settlement.

Parties have been anticipating the AWP rollback and if they have been diligent in preparing contract language that allows for unilateral adjustments to financial terms in the case of an FDB settlement, then the savings to third-party payors may not be realized to any significant extent. If the contract language did not contemplate any settlement due to the contract's age or the lack of diligence, there may still be other provisions that could help modify financial terms. If there aren't any such options, then network pharmacies will effectively incur a reimbursement reduction to their disadvantage unless economic neutrality is achieved independent of the contract terms. …

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