Are Outlier Payments the New AWP?
As the pharmaceutical industry knows very well, even in cases where there is no explicit violation of the applicable Medicare statutory and regulatory framework, the government does not like it when organizations manipulate their practices to increase Medicare reimbursement. In the case of drug companies, there is no standard formula by which they set their average wholesale price. As a result, the AWP for a drug is analogous to a “list price” that a manufacturer has full discretion to set, and may not bear any relationship to the actual “discounted” prices at which the drug is sold. However, Medicare reimbursement for drugs, as well as Medicaid reimbursement in many states, is determined entirely by reference to the AWP assigned to the drug. Pharmaceutical companies are learning that government enforcers consider it to be fraud for a company to increase AWP for the purpose of increasing Medicare or Medicaid reimbursement. The question must be asked if government enforcers will adopt a