Bye Bye AWP part 2

On October 24, the federal district court in Boston will hold a hearing on the motion to approve the tentative settlement of the Prescription Access Litigation Project’s case against the Average Wholesale Price (AWP) publisher, First Databank, discussed in my October 8 post. The settlement agreement, if approved, will require First Databank to stop publishing its AWP listing two years from now, subject to certain exceptions. The AWP is the benchmark for many prescription drug manager pricing arrangements with health plan customers for brand name drugs.

What will replace the AWP? Of course the AWP is no longer the only show in town as other pricing arrangements have been developed. What’s more the the Medicare Modernization Act requires that federal government use an Average Sales Price (“ASP”) methodology (plus 6%) to reimburse the cost of Medicare Part B covered drugs. The HHS Office of Inspector General has recommended that the ASP methodology be extended to Medicaid. Just as the Medicare Part B resource based relative value schedule (RBRVS) has replaced the old California relative value schedule as the primary basis for preferred provider arrangements, I think that we can expect the ASP to be the new wave in PBM pricing.