OIG comes down hard on AWP

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Sunday, March 31, 2002

WASHINGTON - The OIG, in releasing its final report on average wholesale pricing (AWP) last month, recommended CMS require states to bring pharmacy reimbursement for generic drugs more in line with actual acquisition costs.

The report contends states use AWP minus a 10.3% discount, on average, as a basis for reimbursing pharmacies for drug prescriptions. Yet, in reviewing pricing information from 217 pharmacies , the OIG found the actual acquisition cost for generic drugs averaged 65.9% below AWP.

"For the 200 generic drugs with the greatest amount of Medicaid reimbursement in 1999, we calculated that as much as $470 million could have been saved if reimbursement had been based on a 65.9% average discount from AWP," the report stated.

The OIG's review was limited to ingredient acquisition costs and did not address other areas such as the cost of dispensing the drugs.

The OIG recently released results of audits of the drug programs at the Florida Agency for Health Care Administration, the Montana Department of Public Health and Human Services, and the Wisconsin Department of Health.

For Florida, the OIG found that pharmacies purchase brand-name drugs at 22.9% below AWP and generic drugs at 68.2% below AWP. For Montana, it found that pharmacies purchase brand-name drugs at 19.7% below AWP and generic drugs at 65.4% below. For Wisconsin, it found that pharmacies purchase brand-name drugs at 20.5% below AWP and generic drugs at 67.3% below. HME

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