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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of the Relationship Between Medicare Part D Payments to Local, Community Pharmacies and the Pharmacies’ Drug Acquisition Costs," (A-06-07-00107)

January 3, 2008

PDF File Complete Text of Report is available in PDF format (971 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


We conducted this review at the request of 33 Senators.

Medicare Part D payments, excluding dispensing fees, to local, community pharmacies exceeded the pharmacies’ drug acquisition costs by an estimated 18.1 percent when the analysis included rebates that drug wholesalers paid to pharmacies.  Excluding rebates, Part D payments exceeded drug acquisition costs by an estimated 17.3 percent.  The estimated difference between Part D payments and drug acquisition costs was $9.13 per prescription including rebates and $8.78 excluding rebates.

The estimated average Medicare Part D dispensing fee paid to local, community pharmacies was $2.27 per prescription, about $2 less than the average Medicaid dispensing fee.  We recommended that Congress and CMS consider the results of our review, including the data provided, in any deliberations regarding Medicare Part D reimbursement.  CMS concurred with the recommendation.