© 2014 Copharix

 

Price & Performance

Analytics

Price Indexes and Competitiveness Metrics

 

Copharix price indexes, for healthcare products and services, are mathematically derived from pharmacoeconomics foundations.  As a result, we provide significant improvements over current methodologies such as the Average Wholesale Price (AWP), National Average Drug Acquisition Cost (NADAC) and Predictive Acquisition Cost (PAC) for calibrating drug prices used as the basis for drug reimbursements.  The degree of competitiveness among products within a category or companies in a market segment are key statistics that are of value to drug product brand managers for assessing the impact of various marketing, promotional and pricing strategies.  The Healthcare Price Transparency Act (HPTA) of 2013 requires:

 

  • disclosure of information on hospital charges, to make such information available to the public; individuals be provided with information about estimated out-of-pocket costs for health care services; and

  • The provision of a statement of the estimated out-of pocket costs of an individual for anticipated future health care services.

 

Copharix Price Indexes and Competitiveness Metrics will substantially increase the transparency of the prices of our clients’ products and services.  Our Price Index and Competitiveness Metrics will therefore assist our clients to be in compliance with the requirements of the Healthcare Price Transparency Act.  In addition, our Price Indexes will address major deficiencies of existing methodologies.  The Average Wholesale Price (AWP) is a primary drug pricing benchmark utilized in pharmaceutical reimbursement by state and federal agencies. However, this benchmark has been the subject of much scrutiny and litigation over concerns that many AWPs were artificially inflated.  The effect of artificially inflated AWPs results in the overpayment of the ingredient costs for drugs.  Through numerous investigations, it has been found that AWP-based reimbursement was “fundamentally flawed” and caused Medicaid to pay too much for certain drugs.  Following the AWP litigation, a major publisher of pharmacy data discontinued its publication of AWP in September 2011.  This heightened the need for an alternative data source for use in setting drug ingredient costs measures for reimbursement purposes.  Other published drug pricing benchmarks, such as Wholesale Acquisition Cost (WAC), Average Sales Price (ASP), and Direct Price (DP) are available for consideration, but each has limitations.  We therefore focus on the measurement issues, how the indexes are constructed, and how they may be used to decompose the growth in spending into price, quality and quantity components.  We first focus on providing this analytic insight for prescription drugs, which are major inputs in the provision of healthcare services. 

 

Copharix provides its Price Index and Competitiveness Metrics to pharmaceutical manufacturers, drug distribution companies, pharmacy benefit plan management companies, and other participants in the drug distribution chain.  Competitiveness Metrics will be more of interest to pharmaceutical manufacturers and marketing entities who are interested in assessing the effectiveness of product positioning, pricing strategy and salesforce resource allocation.  These services will be provided under multi-year, subscription contracts for specific drug products or groupings of drug products. 

 

Copharix Price Indexes and Competitiveness Metrics are valuable as new financial markets indexes that will help to gauge stock and security prices of various healthcare and pharmaceutical companies.  In this context we will strive to repeat the success of Case-Shiller Housing Price Indexes by introducing various indexes for healthcare and pharmaceutical products and services providing assessments of price trends by product category, manufacturer and other segmentations that are of interest to financial traders.  These Copharix Indexes will help securities investors, investment banks, insurance companies and others whose financial performance is dependent upon price trends for healthcare and pharmaceutical products.  With the insights provided by the Copharix Indexes, our clients will be better able to: forecast their financial performance; estimate loss probabilities; determine capital sufficiency; manage risks; mitigate losses; and achieve earnings targets.  Copharix will also offer various consulting and related information services to support our clients.  We envision the Copharix Indexes for drug prices being used as benchmarks for financial instruments in bond, derivatives, futures, options and stock markets relating to the healthcare and pharmaceutical industries.  Copharix Price Indexes will provide strategic planners critical information that will be a vital part of successful risk management and strategic planning for various players in the healthcare and pharmaceutical industries.