Drug Channels News Roundup: September 2010

Autumn is in the air! Time for a rundown of noteworthy news stories from the Drug Channels universe in September.

Here are three stories worthy of your attention:

• Cost-Plus Plus: Oregon proposes Average Acquisition Cost (AAC) for pharmacies starting in January 2011.
  
  
• Ain't What's Preferred: The editors of a pharmacy journal opine on the best replacement for Average Wholesale Price (AWP).
  
  
• Thank you, Sir. May I have another? Express Scripts (NASDAQ:ESRX) gets ready to acquire again.
  
  
• Unbranding. CVS (NYSE:CVS) launches an innovative private label product.
  

Plus, I announce the winners from the Drug Channels Reader survey!

Oregon Jumps on the Cost-Plus Bandwagon
Following in the footsteps of Alabama's Medicaid Agency, the Oregon Health Authority has submitted a plan to to use Average Acquisition Cost (AAC) as the basis for pharmacy reimbursement starting in January 2011. The Oregon plan differs from Alabama’s approach because it has a tiered dispensing fee based on a pharmacy’s total claims volume per site. Sweet home Oregon? Fun fact: I first discussed cost-plus pharmacy reimbursement in May 2006 in the second post ever on Drug Channels.

What is the Price Benchmark to Replace Average Wholesale Price (AWP)?
I’m so embarrassed! I forgot to celebrate the one-year anniversary of the great AWP rollback. (See AWP Goes Boom.) You can comfort yourself with this useful overview of AWP alternatives written by the editors of the Journal of Managed Care Pharmacy. Perhaps unsurprisingly, they are highly critical of Alabama’s cost-plus plan) and instead favor a different list price such as Wholesale Acquisition Cost (WAC). Read this article with a skeptical eye regarding reimbursement for generic drugs. Loyal readers will recognize every single example in the article (CMS' RFP, Alabama, etc.).

Express Scripts ready to do another PBM deal
According to this Reuters article: “Express Scripts Inc (NASDAQ:ESRX) is ready to strike another deal for a rival pharmacy benefit manager as its integration of the prescription unit of health insurer WellPoint Inc (NYSE:WLP) remains on track." Translation: "NextRx? (Chomp, chomp, gulp.) Yum. (Burp.) I'll have another." Here’s why.

CVS Now Selling Cheaper, CVS-Brand 'People' Magazine
"In an effort to provide a budget-conscious equivalent to People magazine, CVS drugstores nationwide began selling the store-brand CVS Celebrity Magazine on Wednesday." America’s Finest News Source provides another exclusive!

Reader Survey

Thanks to everyone who contributed to the 2010 Drug Channels Reader Survey. The following five lucky respondents were randomly selected to receive a free corporate license of The 2010-11 Economic Report on Pharmaceutical Wholesalers:

• David W.
• John H.
• Mitchell K.
• Norman C.
• Robin D.

The feedback was hugely positive and quite flattering. I'll say more about the survey results in a future post.