Pharmacy reimbursement is currently comprised of two elements: Average wholesale price (AWP) for the drug ingredient(s) and a dispensing fee for the pharmacist services. In exchange for the volume of prescriptions associated with group drug plans, pharmacies extend a percentage discount off of AWP to employers and other drug benefit plan sponsors.

The survey collects reimbursement data from employers for retail, mail, and specialty pharmacy dispensing channels as shown in Table 33. The average percentage discount off of AWP for mail generic prescriptions is collected because not all employers apply maximum allowable cost (MAC) pricing to generic prescriptions dispensed by mail-service pharmacies. MAC pricing is used by 86.6% of employers for retail generic prescriptions and 61.1% of employers for mail-service generic prescriptions, which is an increase since 2007.

Specialty pharmacy reimbursement for 2008 is very similar to retail brand rates with a slightly higher average dispensing fee. The average discount off of AWP is 16.8%, with an average dispensing fee of $2.61.

Negotiated AWP prices for retail brand and generic prescriptions are flat or show a very modest decline. AWP discounts for mail-service declined.

A majority (79.7%) of employers do not have mail-service dispensing fees. As a result, mail-service reimbursement data are split into two groups: employers with dispensing fees and employers with no dispensing fees, as detailed in Table 36. The AWP discounts for employers with no dispensing fees are more reflective of today’s competitive reimbursement for mail than the overall average for all employers in Table 35.

The steady erosion of pharmacy reimbursement, particularly for mail-service, continues its 10-plus year trend. A total of 49.1% of employers said they did not know their pharmacy reimbursement rates. Understanding how much pharmacies are paid for each prescription is a critical step in drug cost management.