Categories
Market Access

Wholesale Acquisition Cost (WAC)

What is Wholesale Acquisition Cost (WAC)?
Wholesale Acquisition Cost (WAC) is one of several pricing metrics commonly used in the United States for drugs. The WAC reflects the price that companies charge the wholesaler, which is typically the first point of sale. WAC prices are published in the Micromedex Red Book.

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Market Access

Buy and Bill

What is buy and bill?
“Buy and bill” refers to the process by which providers get reimbursed for drugs that are administered to the patient in the office. As the name implies, a provider purchases the drug on their own and keeps the inventory on site until a patient needs it. At that point, they would administer the drug to the patient and then bill the insurance company (typically under the medical benefit) for the drug price plus the administration fee.

Medicare reimburses these drugs with a stand ASP + 6% formula (average sales price plus 6%).

There has been a general trend (especially in non-oncology spaces) towards white-bagging models in which some insurers are requiring providers to get their drugs from specialty pharmacies rather than buying them directly due to the high cost associated with buy and bill for insurers. In a white bag model, a specialty pharmacy would buy the drug and bill for it under the pharmacy benefit- the pharmacy would then ship the drug to the provider’s office for a given patient and the provider would administer it and get paid only for the administration. Brown bagging also happens sometimes in which a patient gets the drug from a pharmacy and brings it to the provider’s office for administration rather than it being shipped directly from the pharmacy to the provider’s office.

Categories
Market Access

Drug Pricing

What is Drug Pricing?
Drug pricing is the process by which the list price of a drug is determined. It is usually led by pricing personnel who work within the market access group and use a variety of techniques to recommend potential prices for a new drug. Ultimately, the final pricing decision is often made by executive leadership including potentially the CEO.

Amongst the considerations that pricing personnel consider are results of various market research that is conducted to gauge what providers and payers think about the drug candidate and how they would react at various price points as well as the pricing of competitor drugs. They also use forecasting models and incorporate what expected rebates or discounts may be at various price points to determine the optimal price.

The Senate Finance Committee’s investigation of Gilead on the pricing of their hepatitis C medication Sovaldi made public much of Gilead’s process in coming to the price for that product.

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Market Access

Utilization Management Criteria

What is Utilization Management Criteria (UM Criteria)?
Utilization management (UM) criteria are restrictions that payers put on drugs which restrict how and when they will pay for them for their beneficiaries. Criteria can take many forms including step edits in which certain other medications may be required to be tried prior to reimbursement for a particular drug and prior authorization requirements in which a provider must provide additional documentation justifying use of specific drug.

UM criteria are one of the ways that payers in the US manage their drug costs. Manufacturers will often negotiate with payers to reduce or ease certain UM criteria in exchange for higher levels of rebates. Many of these negotiations are driven by market power including underlying demand for the drug in question as well as the competitive landscape.

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Market Access

Payer Marketing

What is Payer Marketing (Value & Access)?
Payer marketing (often also called ‘value and access’) is a function that falls under market access that is tasked with owning the payer communications strategy for a particular brand. As part of this remit they own development of most materials used by the account executive field team including the product value deck, any disease state materials, potentially tools to help discuss elements of cost, etc. They work closely with internal partners on the HCP marketing side to ensure consistency in messaging and brand strategy.

Payer marketing may also work with HEOR colleagues to develop certain tools for use by account teams with payers such as simple versions of budget impact models. The payer marketing team will generally work with HEOR to ensure that needed evidence is being generated and to ensure alignment with materials being developed for the account team v. for the field medical payer team.

The payer marketing team will determine what the access strategy should be in terms of what plans are of highest priority for favorable formulary positioning, how much in rebates may be justified to one plan v another (this work is done in collaboration with the pricing team), etc. They also track execution versus the plan and forecast along with the account team.