ALEXANDRIA, Va. Stoking a long-simmering dispute over drug payments by health plan sponsors to pharmacies, the nation’s largest independent pharmacy group is appealing a lower court's settlement of a lawsuit that would reduce the published average wholesale price figures used in pharmacy reimbursement contracts.
If the settlement is not overturned, said the National Community Pharmacists Association, the resulting cutbacks in pharmacy payment rates on many drugs could be devastating to community pharmacies. In response, NCPA said Wednesday it has filed an appeal with the First U.S. Circuit Court of Appeals.
The appeal seeks to freeze AWP-based payment rates to pharmacies at their current levels until the federal court has reviewed the mid-March settlement.
The original case revolved around the prices that union pension funds, teachers’ unions and other health plan sponsors were paying pharmacies to dispense drugs to their members. Historically, reimbursement rates have been based on the drug’s AWP. But the plan payers acting as plaintiffs in the original case charged in U.S. District Court that drug-price publishers had allowed those rates to rise to unrealistic levels, leading them to pay a 25% premium over AWP for some 8,000 drugs dispensed to their plan members.
Originally named in the health plans’ suit was First DataBank, which was accused of conspiring with McKesson Corp. to set AWP rates artificially high. But in May 2007, Medi-Span, a division of Wolters Kluwer Health, was named as a defendant in a similar class action involving the publication of AWPs.
“The groups alleged that the two publishers and the wholesalers illegally conspired to inflate the markup between Wholesale Acquisition Cost and AWP from 1.20 to 1.25. This resulted in higher costs to patients and third party payers,” NCPA noted in a statement.
Three years ago, the independent pharmacy group joined the National Association of Chain Drug Stores and the Food Marketing Institute in opposing a proposed settlement that would have rolled back the increase on those 8,000 drugs. That intervention, noted NCPA, “resulted in a $291 per day saving for every community pharmacy when U.S. District Court Judge Patti B. Saris rejected that settlement, savings that continue.”
In January 2008, the judge agreed with NCPA that the rollbacks on the 8,000 brand name drugs would be devastating to community pharmacy. Earlier this year, she pared the list to about 1,400 drugs to be reimbursed at lower rates, and extended the effective date from three months to six months after the settlement, as NCPA requested. “However,” the pharmacy group noted today, “even the reduced list will cause major reductions in Medicaid payments and a 4% cut in AWP-based reimbursements for pharmacies unable to renegotiate their PBM contracts by Sept. 26.”