Avalere Health
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Insights

Feb 12, 2013

Tracking Gaps in State Specialty Pharmacy Reimbursement

Published

Feb 12, 2013

New Medicaid payment methodologies inadequately reimburse specialty pharmacies by failing to account for drug costs and high-touch pharmacy services.

Some state Medicaid programs are moving from an average wholesale price (AWP) reimbursement methodology to an actual acquisition cost (AAC) reimbursement methodology for drugs based on actual selling price. By excluding high-cost outliers, AAC risks underpaying specialty pharmacies. In addition, since specialty pharmacies were excluded from previous data collection surveys by CMS, this entire distribution channel may be underpaid as more states switch to AAC-based reimbursement. If this is the case, manufacturers of specialty drugs (e.g. makers of drugs treating hemophilia, rheumatoid arthritis, and multiple sclerosis) will likely experience margin pressures.

With specialty pharmacies serving as a major access channel for specialty drugs, it is important that state Medicaid programs evaluate how best to account for the unique costs associated with dispensing specialty drugs when developing new reimbursement methodologies and dispensing fee rates.

Avalere conducted this research with funding provided by Grifols. Avalere maintained full editorial control and the conclusions expressed here are solely those of the study’s authors.

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