The Government Accountability Office (GAO) has released a report entitled “Medicaid Outpatient Prescription Drugs: Second Quarter 2008 Federal Upper Limits (FULs) for Reimbursement Compared with Average Retail Pharmacy Acquisition Costs.” The report examines the relationship between FULs based on average manufacturer price (AMP) — as required under the Deficit Reduction Act of 2005 (DRA) but which has been delayed by judicial and legislative action — and pharmacies’ average acquisition costs. Among other things, the GAO concludes that if AMP-based FULs had been in place in the second quarter of 2008, they would have been lower than average retail pharmacy acquisition costs, in general, for most of the 83 drugs in the GAO sample and in the national aggregate (although the GAO notes that its calculations do not account for rebates and discounts that pharmacies may receive from wholesalers or manufacturers). Overall, the FULs would have been 17% lower than acquisition costs, although there was significant variation by state.
