Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Pharmacy Acquisition Costs for Drugs Reimbursed Under the Medicaid Prescription Drug Program of the Colorado Department of Health Care Policy and Financing," (A-06-01-00004)

November 30, 2001

Complete Text of Report is available in PDF format (972 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


Most States use average wholesale price (AWP) minus a percentage discount, which varies by State, as a basis for reimbursing pharmacies for drug prescriptions.  Therefore, the objective of this review was to develop for the Colorado Medicaid program an estimate of the discount below AWP at which pharmacies purchase brand name and generic drugs.  In Colorado, our estimate of the overall discount below AWP for the invoice prices reviewed was 19.64 percent for brand name drugs and 65.32 percent for generic drugs.  Our national estimates, included in reports previously issued, were 21.84 percent and 65.93 percent, respectively.  We recommended that the Colorado Department of Health Care Policy and Financing consider the results of this review as a factor in any future changes to pharmacy reimbursement for Medicaid drugs.