US HHS Medicaid Rx pricing study "flawed"

11 December 2001

The Office of the Inspector General of the US Department of Health andHuman Services' recent study into Medicaid pharmacy acquisition costs for branded drugs (Marketletter August 20) was based on the "flawed" assumption that actual acquisition costs of drugs should be considered as a basis for payment, the National Community Pharmacists Association and the National Association of Chain Drug Stores have claimed.

In fact, they say, actual acquisition cost has never been recognized by the Congress, the courts or the executive branch for determining appropriate payment for products provided by pharmacies to eligible Medicaid beneficiaries. They also note that the OIG had previously said its review was limited to ingredient acquisition costs and did not include other cost factors.

The NCPA and NACDS criticized the study's conclusion that retail pharmacies purchase brand-name drugs at a discount rate of the Average Wholesale Price minus 21.84%, and asked the University of Texas Center for Pharmacoeconomic Studies to analyze its methodology.

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