Evaluating Alternative Benchmarks to Improve 

Identification of Outlier Drug Prices for MEPS 

Prescribed Medicines Data Editing

Yao Ding and Steven C. Hill

FCSM Research & Policy Conference

November 2, 2021
Disclaimer

The views expressed in this presentation are 

those of the authors, and no official 

endorsement by the Department of Health 

and Human Services or the Agency for 

Healthcare Research and Quality is intended 

or should be inferred
MEPS Prescribed Medicines Data

• Household respondents report 

► Drug names 

► Number of fills and refills

► Pharmacies visited

• Pharmacy follow-back survey collects 

► National Drug Codes (NDCs)

► Quantity dispensed 

► Days supplied

► Payments and sources of payments
Why Edit Price in MEPS 

4

• Average prices in the MEPS and IQVIA were fairly close from 2004 through 2011

• A growing divergence between price per fill in the MEPS and IQVIA since 2012. E.g., The 

average price across all fills was 12% higher in the MEPS than that in IQVIA in 2019

We report IQVIA price per fill estimates excluding those fills in long-term care setting

$145.5

$130.0

$0

$20

$40

$60

$80

$100

$120

$140

$160

2019

Price per fill: MEPS vs IQVIA, 2019

MEPS IQVIA
Research Questions

• This study will evaluate potential improvements 

to how prescription drug prices are edited in the 

MEPS Pharmacy Component data

► Identifying outliers in the retail prices reported by 

pharmacy providers

• The goal of editing and imputation is to ensure

► The distribution of unit prices in post-edit MEPS data 

is reasonably similar to other sources, like the IBM 

MarketScan claims data for various types of drugs

− Single source brand name drugs, originators, and generics

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Types of Drugs

• Price editing rules vary between brand and 

generic drugs because prices vary 

► Brand name drugs:

− Single source: have patent protection

− Originators: lost patent protection and face generic 

competition

► Generics: 

− Enter the market when brand name drugs lose 

patent protection and are chemically equivalent to 

originators

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Imputing Missing Payment Data

• MEPS Household Component (HC): Use

• MEPS Pharmacy Component (PC): Payments

► Identify fills missing payment data and price outliers. 

In 2019,

− 56% complete payment data

− 28% OOP payments but missing third party payments 

(“partial payment data”)

− 16% no payment data 

► Imputing payments from donor fills with complete 

data to fills missing payment data and those with 

outlier prices

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Benchmarks to Identify Outlier Prices 

• Current editing : average wholesale unit price (AWUP)

► Drug list price per unit from wholesalers to retail pharmacies

► A growing divergence between AWUP and retail unit prices

• Alternative benchmark prices

► National Average Drug Acquisition Cost (NADAC) per unit

− Average collected in a survey of pharmacies, excluding dispensing fee, 

likely lower than average retail prices

− Not available for those dispensed by specialty pharmacies

► Wholesale acquisition unit cost (WAUC)

− Drug list price per unit for drugs sold by manufacturer to wholesalers

− Appears more strongly linked to retail unit price than AWUP 

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Price Ratios

• To account for diversity of prices across products, we 

assess the plausibility of within product variation using 

price ratios. E.g.,

► Retail Unit Price (RUP) divided by AWUP for current editing

► PRATION (a ratio calculated as RUP divided by NADAC per 

unit; PRATIOW (RUP divided by WAUC) for the new editing 

• In the MEPS PC 

► 93% of fills with NADAC per unit available

► 98% of fills with WAUC available 

► 100% of fills with AWUP available 

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AWUP: average wholesale unit price; NADAC: national average drug acquisition cost; WAUC: wholesale acquisition unit cost
Current Price Editing Rules

• Developed based on validation study with 2006/2007 Medicare 

Part D data and benchmarking to 2007 MarketScan data

• Identify price outliers in RUP relative to AWUP

► The threshold for upper outliers: RUP ≥ 10 times AWUP 

► The thresholds for lower outliers vary with 

− Type of drug (single source, originators, generics)

− Whether discounts or coupons reported for the fill

− Whether the fill was for Medicare Part D and in the donut hole

− Completeness of the payment data

▪ Fills with third party payments>0 are rarely flagged as lower outliers

▪ A small fraction of fills with partial payment data flagged as complete, most 

are imputed a third party payment 

▪ Impute prices for fills with outlier prices from donor fills not flagged as outliers

RUP: retail unit price; AWUP: average wholesale unit price 10
IBM MarketScan Claims Data

• 2019 MarketScan Commercial Claims data

► Randomly selected a 10% sample of the retail or mailorder prescription claims

► Performed data reconciliation to deal with claim 

reversals, reentries or incomplete claims; Rolled up 

claims data to the person-service date-NDC event 

level: ~16.3 million drug fills

► Retail drug price: allowed amount 

− Sum of payments from insurers and out-of-pocket payments 

from enrollees

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NDC: National Drug Code
Findings

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PRATION Distributions in Edited MEPS PC and 

MarketScan Fills for Single Source Brand Name Drugs

Edited MEPS PC: post-edit Medical Expenditure Panel Survey Pharmacy Component data; 

PRATION: a ratio calculated as Retail Unit Price (RUP) divided by National Average Drug Acquisition Cost (NADAC);

Note: 2% and 3% of single source drug fills have a PRATION>2.0 in MarketScan and in edited MEPS PC data, respectively
PRATION Distributions in Edited MEPS PC and 

MarketScan Fills for Generics

Edited MEPS PC: post-edit Medical Expenditure Panel Survey Pharmacy Component data; 

PRATION: a ratio calculated as Retail Unit Price (RUP) divided by National Average Drug Acquisition Cost (NADAC);

Note: 2% and 6% of generic drug fills have a PRATION>20 in MarketScan and in edited MEPS PC data, respectively
PRATION Distributions in Unedited MEPS PC Fills with 

Partial Payment Data and MarketScan for Single Source 

Brand Name Drugs

MEPS Partial PC: Medical Expenditure Panel Survey Pharmacy Component data with partial payment information;

PRATION: a ratio calculated as Retail Unit Price (RUP) divided by National Average Drug Acquisition Cost (NADAC);

Note: 2% and 1% of single source drug fills have a PRATION>2 in MarketScan and in MEPS Partial PC data, respectively
PRATION Distributions in Unedited MEPS PC Fills with 

Partial Payment Data and MarketScan for Generics

MEPS Partial PC: Medical Expenditure Panel Survey Pharmacy Component data with partial payment information;

PRATION: a ratio calculated as Retail Unit Price (RUP) divided by National Average Drug Acquisition Cost (NADAC);

Note: 2% and 0.3% of generic drug fills have a PRATION>20 in MarketScan and in MEPS Partial PC data, respectively
Fills paid by OOP payment

• For single source brand name drugs,

► Edited MEPS PC similar to MarketScan →current approach works well

• For generics, 

► Unedited MEPS with complete payments similar to MarketScan

► Current MEPS editing rules may have imputed third party payments to too 

many fills with missing payment information

− Edited MEPS PC: 38% compared with 47% in MarketScan

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Data Source/ Type of Drugs Single Source Generic

MarketScan 7.7% 47.1%

Edited MEPS Pharmacy Component data 8.5% 38.3%

Unedited MEPS with Complete Payment Data 13.3% 44.7%

Percentage of drug fills paid entirely out-of-pocket payment

OOP: out-of-pocket 
Other Drug Characteristics Investigated

• Brand name originators – somewhere between 

single source and generics

• Biologics – the distribution was similar to that of 

single source brand name

• Liquids – have a thicker tail in the PRATION 

distribution 

• Other forms – did not differ from pills

• Drugs with orphan indications – difficult to 

assess because many had orphan and nonorphan indications

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Potential New Editing Rules in MEPS 

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PRATION

Single Source Generic

Complete payments and (in donut hole or 

discounts reported) .01 .01

Complete payments and not in donut hole and 

no discounts reported* .85 .01

Partial payments and not in donut hole .95 .42

Partial payments in donut hole .45 .42

PRATION: a ratio calculated as Retail Unit Price (RUP) divided by National Average Drug Acquisition Cost (NADAC);

Note: the donut hole thresholds for brand name drugs are approximations to 50% discounts on negotiated prices.

*This drug fill is likely missing a third party payment

• The Upper Threshold for PRATION by Type of Drugs

► 8 for single source liquid drugs, 50 for generics and 4 for all other drugs

• The Lower Threshold for PRATION by Type of Drugs
Potential New Editing Rules in MEPS 

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• In MEPS Pharmacy Component data with 

partial payment information, because very low 

prices need to be edited, we also use a lower 

threshold for price per fill :

► $4 for generics, $10 for originators, and $50 for 

single source brand name drugs

► The lower price per fill threshold does not apply to 

partial fills of less than 6 pills or over-the-counter 

drugs
Limitations

• MarketScan data represent large private-sector 

employers who comprise more than 50% of all 

workers in the U.S. and are not nationally 

representative

• MEPS Pharmacy Component data are not 

nationally representative

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Future Work 

• Assess the impact of new editing rules if they had 

been used on 2019 data

► Distribution of imputed PRATIONs relative to 

MarketScan

► Average prices

► Total drug expenditures overall and relative to 

− National Health Expenditure Accounts

− IQVIA

• Refine editing rules as needed

• Consider implementing the new rules for the 

2020 data

PRATION: a ratio calculated as Retail Unit Price (RUP) divided by National Average Drug Acquisition Cost (NADAC) 22