Pharmaceutical pricing benchmarks: governmental versus private sector

Summary

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 dispensed medications (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 wholesale acquisition 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.