focus on the drug payment methods landscape
DESCRIPTION
Focus on the Drug Payment Methods Landscape. Academy of Managed Care Pharmacy April 17, 2009. Overview. AMCP updating its payment references Environmental scan of payment today Payment methods Payment sources Impact of AMP Other payment methods and developments. I. AMCP Updates. - PowerPoint PPT PresentationTRANSCRIPT
Focus on the Drug Payment Focus on the Drug Payment Methods LandscapeMethods Landscape
Academy of Managed Care Pharmacy
April 17, 2009
2
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
I. AMCP UpdatesI. AMCP Updates
4
ObjectiveObjective
To continue providing comprehensive, unbiased information about payment methodologies and related issues during a period of significant change
5
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
II. Environmental Scan II. Environmental Scan of Payment Todayof Payment Today
7
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
8
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
9
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
10
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
11
““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%
12
Payment Methods and DevelopmentsPayment Methods and Developments
ABP (Alternate Benchmark Price)
ASP
AMP
WAC
AWP
13
ABPABP
Created and published by First DataBank
Currently same $ amount as AWP
14
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
15
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
16
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
17
WACWAC
Reported list price established by manufacturer
Does not include discounts and price concessions
18
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
19
101 North Columbus Street
Suite 201
Alexandria, Virginia 22314 USA
1.703.683.5333
__________________________________
www.taghealthcare.com