In exchange for the volume of prescriptions associated with group drug plans, pharmacies extend a percentage discount off of the AWP to employers and other drug benefit plan sponsors. This reimbursement is the center of an industry debate about the subjectivity of AWP pricing, discussed in the article, “Changing the Drug Reimbursement Landscape.”

What This Year’s Survey Collected
This year’s survey collected reimbursement data (see Table 28) for the retail, mail and specialty pharmacy dispensing channels. This is the first year that the survey has collected the average percentage discount off of AWP. That’s because not all employers apply maximum allowable cost (MAC) pricing to generic prescriptions dispensed by mail-service pharmacies.

65.3 percent of employers use MAC pricing for retail generic prescriptions and 47.1 percent use it for mail-service generic prescriptions.

This also is the first year the survey has collected data about specialty pharmacy reimbursement. For 2007, that reimbursement is very similar to retail brand rates. The average discount off of AWP is 16.5 percent, with an average dispensing fee of $2.48.

Trends in AWP Prices and Dispensing Fees
Both the negotiated AWP prices and the dispensing fees for retail-brand and generic prescriptions continue to decline. AWP discounts for mail-service prescriptions also are declining. The average retail and mail pharmacy reimbursement for brand-name drugs has declined 0.8 percent since the last data collection period in 2005 (see Table 29).

The average reimbursement for employers shows an anomaly in mail-service dispensing fees, with the average at $1.62. That’s significantly higher than the 2005-06 average of $0.24. As a result, mail-service reimbursement data is split into two groups: employers with dispensing fees and employers with no dispensing fees (see Table 31).

About 80 percent of employers do not report mail-service dispensing fees. The AWP discounts for employers with no dispensing fees are more reflective of today’s competitive reimbursement for mail than are the overall averages for all employers (see Table 29).

The steady erosion of pharmacy reimbursement continues its 10-plus-year trend. About 30 percent of employers said they did not know their pharmacy reimbursement rates. In the 2005-06 survey, 40 percent did not know their rates. Understanding how much pharmacies are paid for each prescription is a critical step in managing the drug costs.