In a recent opinion on an important emerging issue, the Commonwealth Court of Pennsylvania has clarified what evidence can be considered in establishing the “Average Wholesale Price” standard for pharmaceuticals in Pennsylvania’s workers’ compensation claims.
In Indemnity Insurance Co. of North America v. Bureau of Workers’ Compensation Fee Review Hearing Office (Insight Pharmacy), No. 696 CD 2018 (Pa. Commonwealth), the defendant, represented by Chartwell Law attorneys Barak Kassutto and Jason Hanford, appealed an adverse fee review determination which had mandated payment for a compounded pain cream bill. The Pennsylvania workers’ compensation medical fee review section had determined that the pharmacy was owed over $6,000.00 for a single tube of pain cream. This cost was calculated based upon the “Average Wholesale Price” of the ingredients as determined by the bureau.
Chartwell’s client appealed the fee review determination to the Commonwealth Court of Pennsylvania, which has immediate jurisdiction for challenge of fee review determinations. In the appeal, Chartwell’s attorneys argued that the method which the bureau used to calculate “Average Wholesale Price” – via reference to an index published by Truven Analytics – resulted in inaccurate and inflated costs for the insurer.
It is noteworthy at the outset to recognize that the Pennsylvania Workers’ Compensation Act limits reimbursement for pharmaceuticals to 110% of their “Average Wholesale Price”. Importantly, the Act does not at any point define the term “Average Wholesale Price.”
By regulation issued pursuant to the Act, the Bureau of Workers’ Compensation states that it may use “any of the Nationally recognized schedules to determine the AWP of prescription drugs.” The bureau publishes its selection annually in the Pennsylvania Bulletin and has historically selected a pharmacy industry publication known as Truven’s “Redbook.”
The Redbook contains the following disclaimer regarding its Average Wholesale Price data: “The Average Wholesale Price (AWP) as published by Truven Health Analytics is in most cases the manufacturer’s suggested AWP and does not necessarily reflect the actual AWP charged by a wholesaler.”(emphasis added)
The “Average Wholesale Price” standard at issue in the appeal before the Pennsylvania Commonwealth Court has been the subject of extensive litigation, both nationally and in Pennsylvania, based upon allegations that pharmaceutical manufacturers were reporting grossly...
