Insight, analysis & opinion from Joe Paduda

Jun
29

Average Wholesale Price – not dead yet…

Wolters-Kluwer, publisher of the Medi-Span pharmaceutical pricing database, just announced it will not stop publishing that database at the end of 2011, or any other date certain.
The reasoning behind the decision appears to be the lack of consensus around a replacement for the AWP standard.
According to W-K’s press release, “discontinuation of AWP before development and industry-wide acceptance of a viable alternative price benchmark to replace AWP could create significant customer problems and confusion or disruption throughout the entire healthcare industry. We also recognize that changes to the data published in our drug information products may impact our customers’ businesses and require significant lead time for them to make corresponding technical and contractual adjustments. It appears that consensus around a comprehensive alternative pricing standard will not be reached this year…”
Included in the release is a rather detailed discussion of precisely what the ‘AWP’ is – and is not. W-K has obviously taken notice of the litigation surrounding AWP, and the release, and further details provided in an accompanying document [opens pdf], provide a pretty very thorough primer on AWP and the W-K database’s development, methodology, and limitations.
The rationale – there is no consensus on a replacement for AWP. rings true As flawed as AWP is, there are inherent problems with alternate pricing methodologies, problems that are not dissimilar from those associated with AWP. The most significant issue is the fact that AWP is NOT an Average nor a Wholesale Price. The MediSpan database is comprised of self-reported data, does not include all ‘wholesalers’ nor rebates and other behind-the-scenes financial transactions, and therefore does not reflect actual pricing. Similar issues plague Average Sales Price, Wholesale Acquisition Cost, and other metrics.

What does this mean for you?

This may motivate buyers and other stakeholders to get cracking on an alternate – either one of the current options or perhaps something new and different. What is abundantly clear is AWP remains flawed – at best. The failure of the industry to find a suitable alternative shows just how opaque the entire pharma pricing/rebate/cost picture is.


Joe Paduda is the principal of Health Strategy Associates

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