Medicaid:

Outpatient Drug Costs and Reimbursements for Selected Pharmacies in Illinois and Maryland

HRD-93-55FS: Published: Mar 18, 1993. Publicly Released: Mar 18, 1993.

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Pursuant to a legislative requirement, GAO reviewed drug purchasing costs and Medicaid reimbursements in Illinois and Maryland, focusing on whether state pharmacies reimbursed Medicaid programs for the discounts on outpatient drugs they received from drug manufacturers.

GAO found that: (1) Medicaid reimbursed the state pharmacies about 19 percent more than they paid for outpatient drugs; (2) hospital and nursing home pharmacies' average reimbursements were 23 and 13 percent more than their purchase costs; (3) all of the pharmacies purchased drugs at prices below the average wholesale price; (4) the Health Care Financing Administration (HCFA) and the states have not established an appropriate profit margin on outpatient drugs for pharmacies; (5) the states' dispensing fees did not completely cover their dispensing costs; (6) HCFA and state Medicaid officials did not have current data on dispensing costs, so they could not determine what dispensing fees should be; and (7) data on pharmacies' actual dispensing costs are needed to determine whether Medicaid drug reimbursements are a potential source for savings.

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