Review of Pharmacy Acquisition Costs for Drugs Reimbursed Under the Medicaid Prescription Drug Program of the Washington Department of Social and Health Services

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 Washington Medicaid program an estimate of the discount below AWP at which pharmacies purchase brand name and generic drugs.  Through use of statistical sampling, we obtained from Washington retail pharmacies 1,076 invoice prices for brand name drugs, and 514 invoice prices for generic drugs.  Our estimate of the overall discount below AWP for the invoice prices reviewed was 20.91 percent for brand name drugs and 65.32 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 Washington Department of Social and Health Services consider the results of this review as a factor in any future changes to pharmacy reimbursement for Medicaid drugs.