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EXECUTIVE SUMMARY:
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 Texas Medicaid program an estimate of the discount below AWP at which pharmacies purchase brand name and generic drugs. In Texas, our estimate of the overall discount below AWP for the invoice prices reviewed was 22.17 percent for brand name drugs and 62.84 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 Texas Health and Human Services Commission consider the results of this review as a factor in any future changes to pharmacy reimbursement for Medicaid drugs. The State Agency stated that they planned to use the data along with their own invoice survey in determining changes to pharmacy reimbursement.