Focus on the Drug Payment Methods Landscape Academy of Managed Care Pharmacy April 17, 2009.
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Transcript of Focus on the Drug Payment Methods Landscape Academy of Managed Care Pharmacy April 17, 2009.
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Focus on the Drug Payment Focus on the Drug Payment Methods LandscapeMethods Landscape
Academy of Managed Care Pharmacy
April 17, 2009
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Overview Overview
I. AMCP updating its payment references
II. Environmental scan of payment today – Payment methods– Payment sources– Impact of AMP– Other payment methods and developments
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I. AMCP UpdatesI. AMCP Updates
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ObjectiveObjective
To continue providing comprehensive, unbiased information about payment methodologies and related issues during a period of significant change
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GuideGuide and and LibraryLibrary Updating in 2009 Updating in 2009
Guide to Pharmaceutical Payment Methods • JMCP summer publication • Online access at amcp.org/home>>Public
Policy & Advocacy>>Pharmaceutical Payment Methodshttp://amcp.org/amcp.ark?p=341FFB74
Related Interactive Library• Online access late summer• Same link as Guide
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II. Environmental Scan II. Environmental Scan of Payment Todayof Payment Today
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Payment Sources for Payment Sources for RetailRetail Rx Drugs Rx Drugs Billions; 2007 Billions; 2007
Federal and State Medicaid
$18.8 (8%)
Other Public$15.0 (7%)
Out of Pocket$47.6 (21%)
Private Health Insurance
$99.1 (43%)
Medicare$47.0 (21%)
_____________________________Source: National Health Spending in 2007…. Health Affairs Volume 28, Number 1; 2009.
Total = $227.5
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Payment Sources for Payment Sources for Non-RetailNon-Retail Drugs Drugs
No data similar to retail Rx data
Evidence that size of market may be comparable to $227 billion retail Rx– Express Scripts estimates that only 43% of
prescription drug costs are paid as pharmacy benefits – 57% paid as medical benefits (1)
– Aetna estimated that “infusable” drug sales were $41.5 billion in 2008 (2)
1. Applying Management Techniques to Drugs in the Medical Benefit. Express Scripts presentation to PCMA. March 24, 2009
2. Medical Pharmaceutical Management: a payor perspective. Aetna Pharmacy Management. 2009
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Payment Methods - 2009Payment Methods - 2009
Retail Rx Drugs Medical Benefit Drugs
Medicare AWP, WAC, Negotiated ASP with few AWP, WAC
exceptions
Medicaid AWP, WAC ASP, AWP, WAC
Private Ins AWP, WAC, Negotiated AWP, ASP
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AWP Impact on Drug PaymentAWP Impact on Drug Payment
Retail Rx: AWP dominates as the basis of payment to pharmacies by almost all government and private insurers
Non-Retail: Approximately 45% of private insurance payment (covered lives) is based on AWP (1) – Almost all Medicare and Medicaid payment to
physician offices and hospital outpatient departments is based on ASP.
1. Source: Data on file. Tag & Associates, Inc. 2008
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““Back of the Envelope” AWP Impact Back of the Envelope” AWP Impact
____Source: Tag & Associates, Inc. estimates from data on file.
Retail
Medicare Part D; Medicaid; most private insurance
85%
Non-Retail
45% of private insurance; Medicare and Medicaid exceptions
30%
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Payment Methods and DevelopmentsPayment Methods and Developments
ABP (Alternate Benchmark Price)
ASP
AMP
WAC
AWP
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ABPABP
Created and published by First DataBank
Currently same $ amount as AWP
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ASPASP
ASP = Manufacturer sales to all US purchasers, net of all price concessions and non-Medicaid rebates, volume weighted, calculated quarterly– Exclude sales that are nominal in amount or
excluded from Medicaid Best Price calculation
Developments– Hospital OP payment lowered to ASP + 4% in
2009; will be lower in 2010
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AMPAMP
AMP = weighted average price across all package sizes of a drug for the lowest identifiable quantity of the drug (e.g., 1 ml, 1 tab) paid to the manufacturer by US wholesalers for a pharmaceutical distributed to the retail pharmacy class of trade
Does not include customary prompt-pay discounts and all sales/discounts to PBMs and HMOs
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AMP StatusAMP Status
In effect for rebate calculation
On hold for Federal Upper Limit (FUL) reimbursement
– Deficit Reduction Act of 2005 required CMS to publish AMP and set the FUL on payment for generic drugs at AMP plus 250 percent
– NACDS-NCPA injunction prevents implementation
– FUL computed using AWP, although some states establish reimbursement limits below FUL at a state maximum allowable cost (MAC)
– Ball in Congress’ court
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WACWAC
Reported list price established by manufacturer
Does not include discounts and price concessions
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AWP – Who Is This Man and AWP – Who Is This Man and Why Is He Smiling?Why Is He Smiling?
George Pennebaker, the Father of AWP
Created in 1969 for Medi-Cal to simplify pharmacy claims processing
Replaced payment based on actual acquisition cost with a new standard reference price -- AWP Source: http://averagewholesaleprice.com
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101 North Columbus Street
Suite 201
Alexandria, Virginia 22314 USA
1.703.683.5333
__________________________________
www.taghealthcare.com