Reimbursement rates stabilized, new study of employers finds

February 5, 2001

Employers let PBMs manage Rx benefit, not just cut costs and utilization, according to the latest Wyeth-Ayerst look at Rx benefit cost and design.

 

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Reimbursement rates stabilized, new study of employers finds

The downward slope of prescription drug reimbursements to community pharmacies has leveled off, according to the latest annual Wyeth-Ayerst Prescription Drug Benefit Cost and Plan Design Survey.

 

Retail Rx brand reimbursement rates

YearAverage AWPAverage dispensing feeDispensing fee as % of AWP

199986.9%$2.307.7%
199886.8%$2.357.8%
199787.4%$2.327.7%
199687.9%$2.478.2%
199588.2%$2.508.3%

 

Community pharmacies were reimbursed on the basis of an average wholesale price (AWP) discount of 13.1% in 1999, with an average brand-drug dispensing fee of $2.30, according to the report. Findings were based on data collected in late 1999 from 446 employers representing more than 15 million beneficiaries. When the dispensing fee was added to the AWP discount, the overall reimbursement rate was 94.6% of AWP. The numbers were little changed from 1998 when the AWP discount was 13.2% and the average dispensing fee was $2.35.

Pharmacies in the Northeast had the lowest reimbursement rates: AWP minus 13.4%, an average brand dispensing fee of $2.17, and an average generic fee of $2.26. Pharmacies in the West fared the best, with AWP minus 12.9% and fees of $2.43 for brands and $2.62 for generics.

The majority of the employers surveyed (60%) paid either 12% or 13% off AWP, although 15% paid AWP minus 15%, and 6% reported a discount higher than 15% off AWP. Dispensing fees for generics averaged $3.41, slightly higher than the $2.30 average for brand drugs.

About 87% of the respondents used mail-service pharmacy. The average mail-service discount in 1999 was AWP minus 17.4% with a $1.38 dispensing fee for brands. The rate in 1998 was AWP minus 17.1% with a $1.51 brand dispensing fee. Mail-service discounts continued to decrease as 12% more respondents had a discount of AWP minus 19% or more in 1999 than did in the previous year.

It has become common for some PBMs to negotiate deep discounts from pharmacies and then offer lesser discounts to their own customers, according to the report. The PBM keeps the difference between the amount paid by the plan sponsor and amount intended for the pharmacy. Plan sponsors were advised to compare the amounts they paid to the PBM and the amount received by the pharmacies to find out whether their PBM is engaging in this practice. The authors also noted that there's an ongoing debate over whether the arrangement, if it's not disclosed to the plan sponsor, violates federal regulations.

Carol Ukens

 

Carol Ukens. Reimbursement rates stabilized, new study of employers finds. Drug Topics 2001;3:23.