Generic Drug Pricing via Comparable Brand WAC Benchmark
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
The average wholesale price (AWP) is no longer a reliable benchmark for pricing generic drugs, as it is not readily available and lacks correlation with the actual cost of generic drugs, making existing pricing methods ineffective for determining the price of generic drugs.
Innovation Solution
A computer-implemented method that identifies a comparable brand drug based on pharmaceutical equivalence, bioequivalence, or therapeutic class, calculates a benchmark value using the wholesale acquisition cost (WAC) of the comparable brand drug, and determines the price of the generic drug based on this benchmark value, providing a stable and predictable pricing solution.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If the average wholesale price (AWP) is used as a benchmark for pricing generic drugs, then the pricing method is simple and readily available, but the reliability and accuracy of the price determination deteriorates
Solution Approach 1:
The patent introduces a comparable brand drug as an intermediary reference point. Instead of directly using AWP (which is unreliable), the system uses the WAC of a comparable brand drug as a mediator to determine generic drug pricing. This intermediary bridge resolves the contradiction by providing a reliable benchmark that is still relatively simple to obtain and apply.
Solution Approach 2:
The patent copies the pricing approach from brand drugs to generic drugs. By using the WAC of comparable brand drugs as a proxy benchmark, the system replicates the reliability of brand drug pricing methodologies while applying them to the generic drug context, thereby improving reliability without significantly complicating the pricing process.
2Loss of information
If the average wholesale price (AWP) is used as a benchmark, then the pricing system is readily available, but the correlation with actual cost of generic drugs deteriorates
Solution Approach 1:
The comparable brand drug serves as an intermediary that bridges the gap between available pricing data and actual generic drug costs. The WAC of brand drugs is both readily available and correlates better with actual costs, making it a superior mediator compared to AWP for this specific contradiction.
Solution Approach 2:
The patent changes the pricing parameter from AWP to WAC of comparable brand drugs. This parameter substitution maintains data availability while significantly improving the correlation with actual costs, as WAC reflects actual wholesale acquisition costs rather than the potentially distorted AWP figures.
3Device complexity
If traditional AWP-based pricing methods are used, then the pricing process is straightforward, but the stability and predictability of pricing deteriorates
Solution Approach 1:
The patent copies the stability characteristics of brand drug pricing by using comparable brand drug WAC values as benchmarks. This allows generic drug pricing to inherit the stability and predictability of brand drug pricing patterns while maintaining the simplicity of the pricing process through straightforward benchmark application.
Data Source
AI summary
This invention provides for innovative methods of pricing generic drugs. In a preferred embodiment, wholesale acquisition costs of identified comparable brand drugs for the generic drugs to be priced according to the invention are identified as comparable brand drug values. The comparable brand drug values are averaged to calculate a stable, predictable benchmark value to be used to determine the price of the generic drug, according to methods of this invention.