Abstract
Background
Pricing drugs in the California Workers’ Compensation System (CAWCS) has become more difficult as there are increasingly fewer drugs listed in the Medi-Cal primary fee schedule, which is used as the source for CAWCS drug prices. This presents a challenge of providing timely and accurate CAWCS reimbursement. The objectives of this study are (1) to explore any trends in physician-dispensed drug prices; (2) to compare the proportion of drugs with and without a price and to determine the financial implications of repricing CAWCS physician-dispensed drugs with five alternative pricing benchmarks; and (3) to offer recommendations for the pricing benchmark to maximize pricing coverage and to remain budget neutral.
Methods
We evaluated physician-dispensed drugs at the transaction level, reimbursed in the CAWCS. Frequency, reimbursement rate, and total and average paid costs were reported. We matched each claim line in the CAWCS to the corresponding unit price of an alternative price benchmark including average wholesale price, wholesale acquisition cost, direct prices, national average drug acquisition cost, and Federal Upper Limit.
Results
Average wholesale price provided prices for 99.9% of physician-dispensed drug claims, while Medi-Cal, the current primary physician-dispensed drug benchmark provided prices for a lower percentage (92.7%) of claims. The CAWCS prices were equivalent to 49% of the average wholesale price, 95.5% of Medi-Cal, 126.7% of the wholesale acquisition cost, 266% of the Federal Upper Limit, 64.4% of direct prices, and 197% of national average drug acquisition cost-estimated prices.
Conclusions
The CAWCS current Medi-Cal pricing for physician-dispensed drugs is better than all alternatives in terms of price availability, transparency, and budget neutrality, but pricing availability may decrease over time as Medi-Cal moves to managed care. National average drug acquisition cost is the next best alternative, but it requires combinations of pricing benchmarks to maximize its price availability.
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Acknowledgements
The authors thank Duyen-Anh Pham and Osama A. Shoair for their major contributions.
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LW obtained funding for the project, designed the study, defined and structured the analysis, and wrote and revised the manuscript. FT conducted the analysis and assisted with the writing of the manuscript. DMT helped design and conduct the analysis and assisted with the writing of the manuscript. WH assisted with the design and structure of the data analysis, and revision of the manuscript. TKL assisted with the design and structure of the data analysis and revision of the manuscript.
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Funding
This study was supported by a contract with the California Division of Workers’ Compensation and with data from the California Workers’ Compensation Institute.
Conflict of interest
Leslie Wilson, Gatema Turkistani, Dang M. Trang, Wei Huang, and Tracy Kuo Lin have no conflicts of interest that are directly relevant to the contents of this article.
Data availability
All of the datasets generated during the current study are published in the article and its Electronic Supplementary Material. We purchased our underlying pricing data from First Data Bank and according to our contract with them, we are not allowed to share these data. Some of the Medi-Cal and national average drug acquisition cost pricing data are available on-line, but we used the First Data Bank national average drug acquisition cost and Medi-Cal prices and therefore cannot share our underlying pricing data.
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Wilson, L., Turkistani, F., Tran, D.M. et al. Financial Impact of Alternative Pricing Benchmarks for Physician-Dispensed Drugs in the California Workers’ Compensation System. Appl Health Econ Health Policy 17, 231–242 (2019). https://doi.org/10.1007/s40258-018-0442-2
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DOI: https://doi.org/10.1007/s40258-018-0442-2