Antidepressants.
Medicines for depression.
AWP under fire again at federal and state levels
For a long time, AWP might as well have stood for "ain't what's paid" as average wholesale price. Since at least 1984, the Office of Inspector General (OIG) has suggested that a different measure be used as the basis for reimbursements for Medicaid and Medicare. "The term AWP never went away, but it really has little function in today's business," said Ronald J. Streck, president of the National Wholesale Druggists' Association. Now AWP is under new scrutiny from Congressional, federal, and state investigators.
"It appears that certain manufacturers may be inflating Medicare drug reimbursement rates as set by the AWP in order to help them better market their drugs," charged Rep. Thomas J. Bliley (R, Va.), chairman of the House Commerce Committee. "By establishing the AWP for Medicare-covered drugs at prices far above what doctors or other providers are actually charged, manufacturers create a 'spread.' " The spread in this case is the difference between 95% of AWP (the Medicare reimbursement level) and the actual acquisition cost, typically much lower. Bliley said his committee has indications that "certain companies may have increased the spread on certain drugs in a calculated and deliberate effort to use this Medicare-funded windfall as a marketing tool to induce medical providers to use their drug."
Medicare Part B doesn't cover most outpatient Rxs, but there are some exceptions. They include Rxs used with durable medical equipment and infusion devices, certain vaccines, and some agents used in association with organ transplants, dialysis, chemotherapy, and pain management for cancer treatments. Many of them must be administered in a physician's office. Physicians and suppliers bill Medicare and are reimbursed at 95% of AWP. Patients are responsible for a 20% co-pay.
"We get AWP information directly from the manufacturer, and we also get it from distributors and take an average price of those two things," said Bill Shaughnessy, product manager for Red Book, a 104-year-old annual reference publication for pharmacies. It is owned by Medical Economics Co., publisher of Drug Topics. Shaughnessy likened AWP to a sticker price on a new car. "No one actually really pays that price," he said. "There are various market conditions that go into the price of a product."
Another prime source of price information is First DataBank Inc. (FDB), which has a contract with Medicaid programs to provide AWP figures. FDB has been cooperating with State Medicaid Fraud Control Units to develop more accurate and valid AWPs. It will use "market prices, rather than prices identified by manufacturers," according to a letter from the New York Attorney General's office to Medicaid pharmacy directors. "Additionally, FDB will no longer report a price for a product unless its manufacturer has certified the completeness and accuracy of the pricing information submitted."
The letter is an outgrowth of an investigation by the Department of Justice and various states into misrepresented AWPs. More than 20 pharmaceutical companies and annual payments by Medicaid and Medicare of more than $1 billion are involved. Bayer Pharmaceuticals confirmed a report first appearing in the Wall Street Journal that it was involved in talks with the government over allegations that certain practices resulted in inflated Rx reimbursements.
Bliley's investigation apparently has not targeted Bayer, but seven other firms have been sent letters seeking information about AWP for specific Rxs. They are Aventis Behring (Gammar, immune globulin), Baxter International (Gammagard, immune globulin), Dey Laboratories (albuterol sulfate), Glaxo Wellcome (Zofran, ondansetron HCl), SmithKline Beecham (Kytril, granisetron HCl), TAP Pharmaceuticals (Lupron, leuprolide acetate), and Warrick Pharmaceuticals (albuterol sulfate).
[ Back to top ]