SOURCE: The Burchfield Group

October 24, 2006 14:17 ET

Pharmacy-Benefit Consultant Speaks Out on Prescription-Drug Average Wholesale Price Issue

AWP May Be Flawed, He Says, But Finding a Better Solution Will Take Hard Work

ST. PAUL, MN -- (MARKET WIRE) -- October 24, 2006 -- A recent article in the Wall Street Journal explained the impact of the settlement of a class-action lawsuit against First DataBank, the primary publisher of prescription-drug average wholesale prices.

Published AWP price points are used by private-sector plan sponsors and government programs to determine how much they reimburse pharmacies for dispensing drugs for their members and beneficiaries. The lawsuit against First DataBank uncovered information specific to its wholesaler survey methodology and a one-time increase of 5 percent for a specific subset of highly used prescription drugs.

"There are problems with AWP and how it is calculated. That situation needs to be remedied, and we need to look to the future and find a better solution to prevent something like this from happening again," said Brain Bullock, president and CEO of The Burchfield Group, a pharmacy-benefit consulting firm that helps employers and other plan sponsors control the costs of providing prescription drug coverage for their beneficiaries. "That said, finding the solution the market needs will not be an easy task."

For further discussion on the topic, visit and listen to today's installment of the Pharmacy Benefits Podcast, in which Bullock discusses this issue in depth and offers insight into how the industry can move beyond this issue.

Despite its flaws, there is currently no good substitute for average wholesale price as a benchmark for pricing prescription drugs in today's marketplace, according to Bullock. The Office of Inspector General, the Centers for Medicare and Medicaid Services (CMS) and other federal agencies and state governments have been working for several years to develop a replacement for AWP, Bullock says. While some progress has been made, nothing yet fits the mold of an acceptable substitute.

According to Bullock, any effective pricing system will have these qualities:

--  accurate and reliable
--  generally and widely available
--  current and up-to-date
--  transparent and accessible

"With the uncertainly surrounding AWP, it is critical that we remember the importance of managing trend," Bullock said. "That's the critical end point in this business, and plan sponsors should not lose sight of the role plan design and other solutions play in controlling costs."

Bullock invites his podcast listeners to submit questions and comments, which he will address directly and in future podcasts. E-mail or call 651-389-5640.

About The Burchfield Group

The Burchfield Group is a pharmacy benefit management consultancy based in St. Paul, Minn. The Burchfield Group brings innovative perspectives to managing pharmacy benefits, helping plan sponsors evaluate and select pharmacy benefit administration vendors, designing pharmacy benefit plans, monitoring plan and PBM performance, and auditing results. Its staff of experts has a vast knowledge of the PBM industry, including insight into drug manufacturers' influences, mail service profits and retail network margins.

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