Finally, September 26th has come and gone, the effective date of the new AWP settlement changes. Your PBM is still processing claims.  Members are still having their drug cards honored at the image pharmacy counter and if you are a drug benefit plan sponsor, you’ll be receiving adjusted invoices to reflect this momentous event.  The problem is that for most plan sponsors, all this “normalcy” is a bad thing!

The adjustments that many had hoped would happen as a result of the settlement, have been altered in a way that creates no economic improvement for the pharmacy benefit plan sponsor! The AWP settlement involved a roll-back of the AWP benchmark pricing for 1,400 drugs that had been artificially inflated. If you were a plan sponsor that relied on an AWP benchmark provided by First DataBank or Medi-span, then you were entitled to file an application to be part of the class action settlement fund. One would think that an adjustment to pricing that lowered the cost of drugs should be  benefiting  the folks who pay for those drugs, i.e., the plan sponsors and their members.  However, most PBMs have included language in their contracts that enables them to make an adjustment in their pricing, so that the “original economic intent” of the contract is maintained.

Most of these same PBMs have sent letters to their clients asking them to sign amendments acknowledging these changes. The requested change is usually in one of two forms: either a reduction in contractual discounts; or a decision by the PBM to maintain their own AWP benchmark that keeps the same markup to wholesale acquisition cost (“WAC”) thereby re-creating the same AWP that was in effect prior to September 26th!

Rather than just let this practice slide as a”business as usual” routine, WBC thinks it should be a great watershed event in the evolution of pharmacy benefit management. When pricing improvements such as this one occurs, a plan sponsor should use the moment to re-qualify their PBM. Is the PBM committed to a mission of serving the exclusive benefit of the plan and their members, or do they have an overriding imperative to serve their own shareholders?

Adjustments to maintain the “economic intent” are designed to maintain the PBMs net margins and  comes at the expense of the plan.  We believe that this pricing event creates the perfect environment to challenge the validity of the whole “AWP Discount” model.  It should be compared to true acquisition cost pricing as a form of direct contracting, an approach that refines the role of a PBM and enables the plan sponsor to dramatically reduce the cost of prescription drugs to the plan and their members.

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