United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2001-09-21 monographic deposited born digital 34 p. GA 1.13:GAO-01-1118 https://www.govinfo.gov/app/details/GAOREPORTS-GAO-01-1118 P0b002ee1803941f0 f:d011118 DGPO 2010-08-12 2011-03-23 GAOREPORTS-GAO-01-1118 machine generated eng fdlp REPORT GAOREPORTS-GAO-01-1118 GAO-01-1118 Health care cost control Health care programs Drugs Federal Supply Schedule Medicare Program Other Written Product A01949

Although physicians and other health care providers acknowledge that they can purchase drugs for prices lower than Medicare payments, they contend that they need drug payments in excess of their actual costs to compensate for inadequate or nonexistent Medicare payments for administrating the drugs. Physicians are able to obtain Medicare-covered drugs at prices significantly below current Medicare payments, which are set at 95 percent of average wholesale prices (AWP). Wholesalers' and group purchasing organizations' prices that would be generally available to physicians were considerably less than AWPs used to establish the Medicare payment for these drugs. The difference between these prices and AWP for physician-administered drugs in GAO's sample varied by drug. For most physician-administered drugs, the average discount from AWP ranged from 13 percent to 34 percent; two physician-administered drugs had discounts of 65 percent and 86 percent. Other suppliers are also able to purchase drugs at prices that are considerably less than the AWP used to establish the applicable Medicare payment. Pharmacy suppliers were predominant billers for 10 of the high-expenditure and high-volume Medicare-covered drugs GAO analyzed. In general, these suppliers provide two types of drugs--drugs administered through durable medical equipment (DME) and covered oral drugs, such as certain immunosuppressives. Also, suppliers generally receive a payment from Medicare for DME and supplies. Private and other public payers use differing payment methods for drugs and their administration. Private health plans use their drug-purchase and patient volume to negotiate favorable prices for drugs and physician and supplier services related to supplying or delivering the drugs. Other public payers also use their purchasing volume along with information about actual transaction prices from private payers to lower their drug payments. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-01-1118/html/GAOREPORTS-GAO-01-1118.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-01-1118/pdf/GAOREPORTS-GAO-01-1118.pdf GAO-01-1118 https://www.govinfo.gov/app/details/GAOREPORTS-GAO-01-1118 Other Written Product GAO-01-1118; Medicare: Payments for Covered Outpatient Drugs Exceed Providers' Costs; Health care cost control Health care programs Drugs Federal Supply Schedule Medicare Program Title 42 Section 1396r 42 U.S.C. 1396r Volume 104 Page 1388 104 Stat. 1388 Volume 113 Page 1150 113 Stat. 1150 Volume 114 Page 2763 114 Stat. 2763 Public Law 101-508 Public Law 104-191 Public Law 106-113 Public Law 106-554