On Friday, July 8, 2011, the Centers for Medicare and Medicaid Services (CMS) released a long-awaited announcement that it had selected a contractor to conduct monthly surveys of retail pharmaceutical prices and payments. According to CMS, the goal of the “Survey of Retail Prices is to develop a monthly survey of retail community pharmacy prescription drug prices and … [generate] publicly available pricing files.” All entities within the pharmaceutical supply channel should closely follow the development and implementation of this survey, as it presents the potential to influence significantly how State Medicaid Agencies set the rates at which they reimburse pharmacies and providers. To view the CMS Announcement, please click here.

Despite predictions in recent years suggesting the imminent demise of the Average Wholesale Price (AWP) and a reduced role for Wholesale Acquisition Cost (WAC) as a reimbursement metric, most states continue to rely on these two price points to pay pharmacies for at least a portion of their branded prescription drugs. In recent months, however, the federal government and the states have signaled that they intend to move away from AWP and WAC-based systems for Medicaid reimbursement and have encouraged the development of alternative payment systems — ones that would generate significant cost savings.

Please see full Alert below for further information.