One pill, many prices: variation in prescription drug prices in selected government programs.

This paper updates a June 2002 National Health Policy Forum Issue Brief, "Average Wholesale Price for Prescription Drugs: Is There a More Appropriate Pricing Mechanism?" Since the release of that paper, Congress enacted the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003, which created a new, comprehensive outpatient prescription drug benefit and reduced Medicare's reliance on the average wholesale price (AWP) in paying for prescription drugs. This paper discusses the continued use of AWP as well as other pricing benchmarks that pertain to prescription drugs. It explains the relevance of these pricing mechanisms to different government programs and sets forth some of the issues that have arisen in their use. The paper also contains a glossary of commonly used drug pricing terms, as well as an appendix that lists state Medicaid drug payment formulas.

The Medicare prescription drug proposals and health insurance risk.

In order to facilitate a better understanding of the complex issues raised by the current Senate and House proposals to establish a prescription drug benefit for Medicare beneficiaries, this paper briefly addresses some fundamentals of the health insurance market, defines key risk-sharing mechanisms, including risk corridors and reinsurance, and identifies the relevant risk provisions in the bills. Other issues related to cost management strategies and program design, which may have an impact on cost and adverse selection, are briefly discussed.

Medicaid prescription drug coverage: state efforts to control costs.

This paper provides a brief summary of the Medicaid prescription drug benefit. It explains the mechanisms being used by states to control their prescription drug spending within the Medicaid program. The paper also highlights some of the concerns that have been expressed with these mechanisms and the litigation that has been initiated in several states as a result of these efforts. It takes a closer look at three states with cost-containment strategies that have been the focus of increased scrutiny.

Average wholesale price for prescription drugs: is there a more appropriate pricing mechanism?

This paper defines the average wholesale price (AWP), which has become an important benchmark for prescription drug pricing and reimbursement.The paper briefly explains the AWP's various uses in the pricing of prescription drugs, highlights some of the problems that have emerged as a result of the way it is reported and used, and explores some of the possibilities for reform. The paper also contains a glossary of commonly used terms, as well as an appendix that lists the state Medicaid reimbursement formulas.