Re: Update Regarding AWP Litigation
June 2, 2008
Dear First DataBank Customer:
In October 2006, First DataBank announced certain proposed changes in our drug pricing reporting practices that may impact your use of First DataBank’s National Drug Data File Plus™ database and other related products. These changes relate to the publishing of the Blue Book Average Wholesale Price (Blue Book AWP) and the proposed settlement of a class action litigation concerning the publication of Blue Book AWP.
I would like to share with you some very important developments regarding this proposed settlement and other changes in our drug pricing reporting practices.
I can now report that negotiations in this case have resulted in amendments to the proposed settlement. These amendments are necessary as the original proposed terms did not receive court approval in January 2008. The amended settlement was filed with the court at the end of last week.
If the terms of the amended settlement are approved by the court, First DataBank will be required to (1) adjust its reporting of Blue Book AWP for those prescription drugs identified in the plaintiffs' previously filed complaint (approximately 1400 NDCs in number) by reducing the mark-up factor utilized in connection with the calculation of the Blue Book AWP data field to 1.20 times the WAC or Direct Price for those NDCs that are on a mark-up basis; (2) establish a centralized data repository to facilitate reasonable access to discoverable material from First DataBank concerning its drug price reporting practices, (3) make a one million dollar contribution into a court-supervised fund for the benefit of the settlement class members, and (4) pay certain settlement-related notice and other expenses and fees.
The adjustments to Blue Book AWP will become effective on or about ninety days after final court approval of the amended settlement agreement. The approval process will, again, require a preliminary approval by the court, notification to the class, and final approval by the court. At this time, no dates have been set by the court.
Independent of the settlement and on the same schedule as the Blue Book AWP adjustment noted above, First DataBank intends to apply the same 1.20 markup factor to all other NDCs whose Blue Book AWP is set based upon a markup to WAC or Direct Price in excess of 1.20. First DataBank will also independently discontinue publishing the Blue Book AWP data field for all drugs no later than two years following the date that the Blue Book AWP adjustments noted above are implemented.
First DataBank will continue to publish other available drug pricing information including WAC, Direct Price, Suggested Wholesale Price, Federal Financing Participation Upper Limits (FFPUL), as well as our clinical drug information.
In the recognition that these changes to the NDDF Plus database may impact many of our customers, we are implementing them on a schedule that will provide sufficient notice and an opportunity for customers to plan accordingly.
First DataBank remains committed to providing our customers with the best available drug and drug-related information, including pricing data. We will continue to work with the public and private sector to gather and publish additional drug pricing data elements, as available, and to facilitate the establishment of sustainable drug reimbursement benchmarks.
If you have any questions, please feel free to call Customer Relations at 1-800-428-4495 ext. 220.
Very truly yours,
Donald M. Nielsen, M.D.
President
