For all the faithful who have been awaiting some news regarding the status of the First DataBank/Medispan AWP settlement, we have an update!
On Tuesday, March 17, 2009, Judge Patti Saris issued (finally!) a “Memorandum and Order.” She indicated that the AWP adjustment would be effective six months after the date of the order. This puts it sometime around mid-September.
While not yet a “Final Judgment,” it moves the process along toward the anticipated conclusion, i.e., the spread reporting between WAC pricing and AWP will be rolled back and the published Blue Book will be eliminated.
Additionally, AWP as a pricing benchmark will be that much closer to going the way of the drugstore phone booth (a quaint accommodation from a bygone era).
Plan sponsors should be preparing themselves to revisit their PBM contracts to address a change to the AWP language. The “standard” contract offered by most PBMs make reference to an “adjustment” that will occur to the pricing if another benchmark comes into use to replace AWP. This “adjustment” they claim, is to “reflect the original economic intent of the parties.”
I ask, “Whose original economic intent?” The plan sponsor should expect that changes in the economic environment that reduces drug costs should accrue to the benefit of the sponsor and their members. I don’t believe that these changes, particularly those driven by litigation settlements, should be adapted in order for the PBMs to maintain their profit margins. A move to Acquisition Cost pricing has begun which represents a fundamental change in the PBM model . As more plan sponsors jump on board, the industry will evolve, producing a more accurate accounting for plan performance comparison.