Capital Rx study: Greater price transparency around drugs could save millions in Medicaid

Rolling out greater price transparency for pharmaceuticals could lead to billions in savings, according to a new analysis.

Startup pharmacy benefit manager Capital Rx and 3 Axis Advisors teamed to analyze pricing data across a number of sources and found that Medicaid plans could save $937 million annually if all retail pharmacies reported acquisition prices through the National Average Drug Acquisition Cost (NADAC) survey.

An additional $155 million in savings could be realized if more robust NADAC survey requirements were applied to more than 1,600 products that do not currently have them, the survey found.

Over a decade, Medicaid plans could save more than $10 billion, according to the report. The study does not extend to potential savings that could be achieved in Medicare or commercial plans, the groups said.

RELATED: Startup PBM Capital Rx closes $50M series B funding round

The NADAC surveys are run by the Centers for Medicare & Medicaid Services and estimate the average price paid by both independent and chain pharmacies for drugs. The data are used to create a benchmark for supply and demand.

One of the benefits of using NADAC data over traditional metrics such as the wholesale acquisition cost or average wholesale price is that NADAC information is made available through a free public database, Capital Rx said.

“This study clearly shows that greater transparency with prescription drug pricing practices could create billions of dollars in savings for patients and payers," Matthew Gibbs, president of commercial markets at Capital Rx, said in a statement. "Capital Rx has been utilizing NADAC pricing as a foundation for our Clearinghouse Model for over three years. We have seen clients lower their drug trend by 10% to 20% through leveraging this NADAC-based model.”

The startup is the fastest-growing PBM in the country and just closed a $50 million series B funding round in February. It has also teamed with Walmart to enhance price transparency around drugs.