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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 West Virginia Department of Health and Human Services," (A-06-01-00007)

December 31, 2001

Complete Text of Report is available in PDF format (945 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 West Virginia Medicaid program an estimate of the discount below AWP at which pharmacies purchase brand name and generic drugs.  Our estimate of the overall discount below AWP for the invoice prices we reviewed was 21.71 percent for brand name drugs and 68.92 percent for generic drugs.  Our national estimates, included in reports we previously issued were 21.84 percent and 65.93 percent, respectively.  We recommended that the West Virginia Department of Health and Human Resources (State Agency) consider the results of our review as a factor in determining any future changes to pharmacy reimbursement for Medicaid drugs.  The State Agency stated that it was considering adjusting the discount of AWP to more correctly reflect the prices pharmacies are actually paying for prescription drugs.