Are We One Step Nearer To Lifelike Costs For Medicine In Pennsylvania Staff’ Compensation Claims? | Chartwell Regulation

In a recent statement on an important emerging issue, the Commonwealth Court of Pennsylvania clarified what evidence can be used in setting the “Average Wholesale Price” standard for pharmaceuticals in claims for damages by workers in Pennsylvania.

The Indemnity Insurance Co. of North America appealed against the Insight Pharmacy Hearing Bureau, No. 696 CD 2018 (Pa. Commonwealth), represented by Chartwell Law attorneys Barak Kassutto and Jason Hanford , Citing a negative fee review investigation that had required payment for a compound pain cream bill. The Pennsylvania Medical Fees Review Department found that the pharmacy was owed more than $ 6,000 for a single tube of pain cream. These costs were calculated based on the “average wholesale price” of the ingredients as determined by the office.

The Chartwell customer appealed the fee review finding to the Commonwealth Court of Pennsylvania, which has immediate jurisdiction to challenge fee review findings. On appeal, Chartwell attorneys argued that the method the office used to calculate the “average wholesale price” by reference to an index published by Truven Analytics resulted in inaccurate and excessive costs for the insurer.

To begin with, note that the Pennsylvania Workers’ Compensation Act limits drug reimbursement to 110% of their “average wholesale price.” It is important that the law never defines the term “average wholesale price”.

Under the ordinance made under the Act, the Bureau of Workers’ Compensation may use “any of the nationally recognized schedules to determine the AWP of prescription drugs”. The office publishes its selection annually in the Pennsylvania Bulletin and has historically selected a pharmacy industry publication known as Truvens “Redbook”.

The Redbook includes the following disclaimer regarding its average wholesale price data: “The average wholesale price (AWP) published by Truven Health Analytics is in most cases suggested by the manufacturer AWP and does not necessarily reflect the actual AWP that a wholesaler charges. “(Emphasis added)

The Average Wholesale Price standard at issue in the Pennsylvania Commonwealth Court appeal has been the subject of extensive legal disputes both nationally and in Pennsylvania over allegations that pharmaceutical companies reported grossly inflated average wholesale prices to widen the spread of profits from the sale of their drugs.

Chartwell believes that there is an obvious mismatch between the simple meaning of the term “Average Wholesale Price” and the term AWP used in the Redbook. The gap between the “real” average wholesale price and what is a “fictitious” one[1] The average wholesale price billed to employers and insurers in Pennsylvania can be thousands of dollars per prescription. Chartwell attorneys therefore pursued this appeal in the Commonwealth Court to argue that the office should not rely solely on the Redbook to resolve AWP disputes.

In a dissenting / concurring opinion in Indemnity Insurance Co. of North America v Bureau of Workers’ Compensation Fee Review (Insight Pharmacy), two Commonwealth Court judges almost entirely agreed with Chartwell’s legal argument on the average wholesale price issue . However, the majority found that the defendant’s case was inadequate in terms of the evidence presented. The court concluded that Chartwell’s customer had not provided sufficient administrative evidence to support an alternative calculation of the “average wholesale price” value.

Ironically, at the administrative hearing level, a useful factual record could never have been made for this claim. As anyone familiar with the Pennsylvania fee review process will know, the Fee Review section has historically treated the “average wholesale price” data from Truvens Redbook as inviolable. In contrast to the court’s admonitions, in practice the office always calculated the prices using a formula “according to the book”. Neither the office nor the office hearing officers have ever had a debate about the accuracy of the Redbook itself.

In this case, the majority, while closing the door on the defendant’s appeal, opened a far more important door for this client, as well as for employers and insurers across the Commonwealth. What is important is that the Pennsylvania Commonwealth Court has expressly stated for the first time after two rounds of oral hearings that this is a fee review section Not inextricably linked to the “average wholesale price” that can be found in industry compendia such as Truvens Redbook. The majority in the Commonwealth Court stated this as follows:

The insurer could have produced evidence to support a calculation of an AWP that is more accurate than that approved by the regulation and listed by the Bureau in the Pennsylvania Bulletin.


Likewise, The ordinance does not prevent a provider or employer from proposing a nationally recognized schedule other than that set forth by the Bureau in the Pennsylvania Bulletin if a dispute over reassessment is brought before the Medical Fee Review Department or the Hearing Officer. The insurer was free to provide evidence of another data source for determining the AWP for each of the ingredients used in the compound medicinal cream, which would have enabled the fact finder to convert the pharmacy’s invoice to a different result.

As a result of this case and the work of Chartwell attorneys, it appears that Pennsylvania employers and workers’ compensation insurers cannot use alternative “nationally recognized schedules” for drug reassessment. This case signals the beginning of a change in pharmacy prices under the Pennsylvanian Workers’ Compensation Scheme, with enormous potential for cost savings both on individual claims and across the board.

AWP may vary depending on the drug manufacturer and date. Therefore, the prices listed above are for demonstration purposes only. For up-to-date and case-specific factory price information, contact your attorney or send a copy of a recently paid drug bill / benefit explanation with personal information to [email protected].

Given this potential reduction in drug reimbursements, we anticipate further challenges for pharmacies and expect the issues associated with this case to be subject to further appeal.

After making this decision, it cannot be stressed enough that Pennsylvania employers and insurers have opened the door to stop paying excessive charges based on the “fictitious” Redbook AWP and instead reevaluate drug bills and evidence of alternative and fee review to submit true measures of the average wholesale price.

We encourage you to take a closer look at drugs that cost over $ 500 per prescription. There may be new opportunities for re-evaluation beyond the Redbook or the office’s current approach. These cases can be complicated and factual. We recommend that you consult a lawyer of your choice before taking any action. We would be happy to discuss specific questions with our customers.

[1] This is not our editorial comment. The Commonwealth Court in TAP Pharmaceuticals concluded that “the published AWPs were fictitious prices” in a case involving drugs from large pharmaceutical companies. Commonwealth v TAP Pharm. Prods., 36 A.3d 1112, 1129 (Pa. Cmwlth. 2011)

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