Review of Pharmacy Acquisition Costs for Drugs Reimbursed Under the Medicaid Prescription Drug Program of the Indiana Family and Social Services Administration

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 Indiana 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 21.78 percent for brand name drugs and 66.71 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 Indiana Family and Social Services Administration (State Agency) consider the results of our review as a factor in any future changes to pharmacy reimbursement for Medicaid drugs.  The State Agency concurred.