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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 for the Delaware Department of Health and Social Services," (A-06-95-00063)

September 12, 1996


Complete Text of Report is available in PDF format (373 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.

EXECUTIVE SUMMARY:

This review, part of a nationwide audit of pharmacy drug acquisition costs requested by the Health Care Financing Administration, was made to develop an estimate of the difference between the actual acquisition costs of drugs of the dispensing pharmacy and the average wholesale price (AWP) used by States in helping establish drug reimbursement amounts. Most States reimburse pharmacies for Medicaid prescriptions using a formula which generally discounts the AWP by 10.5 percent. This review was made in 11 States. This final report discloses results in Delaware. In Delaware the overall estimate of the extent that AWP exceeded pharmacy purchase invoice prices was 19.3 percent for brand names drugs and 37.0 percent for generic drugs. We believe that the differences between AWP and pharmacy acquisition costs as determined by our review are significant enough to warrant consideration by the State in any evaluation of the drug program. Therefore, we are recommending that the State agency consider the results of our review in determining any future changes to pharmacy reimbursement for Medicaid drugs in Delaware.