First Databank AWP Litigation Impact

While the press releases and court documents suggest a 4% savings to clients as a result of this successful settlement. The following factors may impact that estimate:

We evaluated the impact in 2002 using AWP, WAC & adjudicated prices weighted by our actual utilization. For brand drugs:

• AWP increased by 7.4%
• WAC increased by 5.3%
• AWP/WAC increased from 13.6% to 15.9%, a total of 2.3%

Other factors that should impact this 4% savings include:

• Since 2001, the utilization of generics have increased dramatically (e.g., 10%) which will lower the overall impact of any price changes.
• PBMs and pharmacies routinely include clauses that let them modify pricing in the event of government or legal action that impacts prices .
• PBMs and pharmacies could easily modify their maximum allowable cost (MAC) list to increase prices on generics.

This situation may lead to pricing indexed on average manufacturer price AMP and average selling price (ASP).