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 2002-03-14 monographic deposited born digital GA 1.13:GAO-02-531T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-02-531T P0b002ee18037757c f:d02531t DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-02-531T machine generated eng fdlp REPORT GAOREPORTS-GAO-02-531T GAO-02-531T Drugs Health care cost control Health care programs Medical equipment Payments Pharmaceutical industry Physicians Program management Federal Supply Schedule HCFA Common Procedure Coding System Medicare Program Testimony A02897 In some cases, Medicare's payment for covered outpatient drugs is significantly higher than the actual costs to the physicians and pharmacy suppliers. Yet attempts to reduce these payments have been met with provider claims that overpayments for the drugs are needed to cover underpayments for administering or delivering them. Medicare's method for establishing drug payments is flawed. Medicare pays 95 percent of the average wholesale price (AWP), which, despite its name, is neither an average nor a price that wholesalers charge. Instead, it is a number that manufacturers derive using their own criteria. There are no requirements or conventions that AWP reflect the price of actual drug sales. Widely available purchase prices for drugs in 2001 were substantially below AWP. For both physician-billed drugs and pharmacy supplier-billed drugs, Medicare payments often far exceeded widely available prices. Physicians and pharmacy suppliers contend that the excess payments for covered drugs are necessary to offset what they claim are inappropriately low Medicare payments or no such payments for services related to the administration or delivery of these drugs. While physicians receive an explicit payment for administering drugs, Medicare's payment policies for delivering pharmacy supplier-billed drugs and related equipment are uneven. Pharmacy suppliers billing Medicare receive a dispensing fee for one drug type--inhalation therapy drugs--but not for other covered drugs, such as infusion therapy or covered oral drugs. Other payers and purchasers, such as private health plans and the Department of Veterans Affairs (VA), employ different approaches in paying for or purchasing drugs that may be instructive for Medicare. In particular, VA uses the leverage from the volume of federal drug purchases to secure verifiable data on actual market transactions and it uses the prices paid by manufacturers' best customers to set Federal Supply Schedule prices. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-02-531T/html/GAOREPORTS-GAO-02-531T.htm GAO-02-531T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-02-531T Testimony GAO-02-531T; Medicare Outpatient Drugs: Program Payments Should Better Reflect Market Prices; Drugs Health care cost control Health care programs Medical equipment Payments Pharmaceutical industry Physicians Program management Federal Supply Schedule HCFA Common Procedure Coding System Medicare Program Volume 106 Page 2763 106 Stat. 2763 Volume 111 Page 251 111 Stat. 251 Volume 113 Page 1501 113 Stat. 1501 Public Law 105-33 Public Law 106-113 Public Law 106-554