The time for meaningful industry dialogue about pharmacy reimbursement and drug pricing is here. With the resolution of the lawsuits against drug database publishers, average wholesale price (AWP) data for prescription drugs are not likely to be published after September 2011. A different benchmark will be needed. Simply changing the drug price benchmark does not create a more accurate and valid system of pricing drugs.

Pharmacy reimbursement and third-party drug claim pricing are complex issues. Payers want to understand more about how drug pricing, reimbursement, and PBM revenues are calculated. In keeping with a greater emphasis on transparency in the market, drug benefit plan sponsors also want transparency in drug pricing methodologies.

It is important for plan sponsors to advocate for a system that is transparent, rational and intelligible. Product reimbursement should approximate average acquisition costs. Pharmacy dispensing fees should provide fair compensation for services provided to patients. The system should include incentives for providers and pharmacies to manage drug therapies in a cost-effective manner. The ideal price benchmark should be:

• Accurate and reliable
• Clearly defined operationally
• Simplest methodology possible to yield meaningful values
• Reasonable estimation of average acquisition cost
• Sensitive to class of trade issues
• Updated and reported on a timely basis
• Verifiable and auditable

Systemic change will take time and implementation will be challenging. The market has been busy updating third-party contracts–payer-PBM, PBM-pharmacy, manufacturer rebate agreements–throughout 2009. As this report goes to press, the industry awaits the roll-back of the markup of wholesale acquisition cost (WAC) from 1.25 to 1.20 on about 1,400 prescription drugs.

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