Walmart to use Capital Rx’s Clearinghouse Model

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Walmart to use Capital Rx’s Clearinghouse Model

By Sandra Levy - 09/04/2019
Walmart is stepping up its efforts to bring visibility to drug unit prices with the use of PBM Capital Rx's newly launched Clearinghouse Model. The model uses the National Average Drug Acquisition Cost, or NADAC, which is maintained by the Centers for Medicare and Medicaid based on surveys of actual acquisition costs among retail pharmacies.

With a NADAC benchmark, Capital Rx  said it relies on an unbiased source that also ensures price consistency because NADAC prices only update when changes of +/-2% occur. In addition, Capital Rx ‘s contracts with employers offer an industry-first actual unit costs for all drugs, that are the same for all customers.

"When Capital Rx approached us with the Clearinghouse Model, we immediately recognized a common goal and shared vision,” Walmart health and wellness vice president Luke Kleyn said. “Walmart is working with Capital Rx to deliver the lowest prescription prices and enable our customers to live better. Under the Clearinghouse Model, employers and plan sponsors will have direct visibility to the value provided by Walmart.”

“Everyone knows drug prices are rising at alarming rates, but the most interesting metrics we’ve been following over the years are price variability and PBM profit margins.” said AJ Loiacono, Capital Rx CEO. “Gaps between AWP and acquisition cost create large “spread” opportunities for traditional PBMs. In this model, different employer groups pay wildly different drug prices, and two patients in the same plan can be charged different prices, even when standing in the same pharmacy. This absurd process ends with the introduction of the Clearinghouse Model.”

Presently, employers never see the PBM’s reimbursement to the pharmacy, and the pharmacy never sees the amount billed to the employer, enabling artificial price variability, Capital Rx said.

“We looked at a variety of models to solve this issue, but we focused on the most famous clearinghouse of all, the New York Stock Exchange. By allowing each counterparty to verify and authenticate a drug’s price, Capital Rx brings principles widely accepted in the financial world to the prescription drug industry for the first time,” Capital Rx chief operating officer Joseph Alexander said.

“Capital Rx was founded with the mission to fix the issues plaguing the existing pharmacy benefits model and to address shortcomings in the prescription supply chain. Rather than expend resources supporting a system that conflates opacity with earnings, we focus our efforts on improving service and patient outcomes through data-driven programs. The Clearinghouse Model we’re launching is a key first step, establishing a simple framework that allows us to move the conversation past validating artificial pricing guarantees,” said Loiacono.