Pharmaceutical pricing benchmarks: governmental versus private sector.

Abstract

Purpose: To explore the best pricing benchmark for workers'compensation drugs reimbursement at retail pharmacies. Materials & methods: We used California workers'compensation system (CAWCS) total cost of pharmacy dispensedmedications (2017-2019) as a proxy to estimate drug prices using alternative pricing mechanism fee schedules. Results: CAWCS paid 65.6% of the average wholesale price (AWP), 104.1% of Medi-Cal, 122.1% of the wholesaleacquisition cost (WAC), 140.1% of the national average drug acquisition cost (NADAC), and 253.5% of the federal upper limit. In addition, we found the AWP-based formulas: CAWCS=AWP -34.4%, Medi-Cal=AWP -36.9%, WAC=AWP -46.3%, NADAC=AWP -53.2%, and federal upper limit=AWP -74.1%. We found that AWP: 50% for generics and AWP -18.2% for brands are the lowest paying formulas. The estimated median cost savings were $8.7 million (by adapting 97% of the WAC) and $9.5 million (by adapting the NADAC) across all states. Conclusion: NADAC was the best pricing benchmark for reimbursement of pharmacy dispensed drugs.