Transcript AMCP Orlando Tag - Focus on the drug payment methods

Focus on the Drug Payment
Methods Landscape
Academy of Managed Care Pharmacy
April 17, 2009
Overview
I.
AMCP updating its payment references
II. Environmental scan of payment today
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Payment methods
Payment sources
Impact of AMP
Other payment methods and developments
I. AMCP Updates
Objective
 To continue providing comprehensive,
unbiased information about payment
methodologies and related issues during a
period of significant change
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Guide and Library Updating in 2009
 Guide to Pharmaceutical Payment Methods
• JMCP summer publication
• Online access at amcp.org/home>>Public Policy &
Advocacy>>Pharmaceutical Payment Methods
http://amcp.org/amcp.ark?p=341FFB74
 Related Interactive Library
• Online access late summer
• Same link as Guide
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II. Environmental Scan
of Payment Today
Payment Sources for Retail Rx Drugs
Billions; 2007
Other Public
$15.0 (7%)
Federal and
State Medicaid
$18.8 (8%)
Out of Pocket
$47.6 (21%)
Medicare
$47.0 (21%)
Total = $227.5
Private Health
Insurance
$99.1 (43%)
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Source: National Health Spending in 2007…. Health Affairs Volume 28, Number 1; 2009.
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Payment Sources for Non-Retail 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 - 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 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.
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Source: Data on file. Tag & Associates, Inc. 2008
“Back of the Envelope” AWP Impact
Non-Retail
Retail
85%
30%
Medicare Part D; Medicaid; most
private insurance
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Source: Tag & Associates, Inc. estimates from data on file.
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45% of private insurance;
Medicare and Medicaid exceptions
Payment Methods and Developments
 ABP (Alternate Benchmark Price)
 ASP
 AMP
 WAC
 AWP
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ABP
 Created and published by First DataBank
 Currently same $ amount as AWP
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ASP
 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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AMP
 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 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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WAC
 Reported list price established by manufacturer
 Does not include discounts and price concessions
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AWP – Who Is This Man and
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
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Source: http://averagewholesaleprice.com
101 North Columbus Street
Suite 201
Alexandria, Virginia 22314 USA
1.703.683.5333
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[email protected]
www.taghealthcare.com
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