Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Medicaids Use of Revised 
Average Wholesale Prices 
JANET REHNQUIST 
Inspector General 
SEPTEMBER 2001 
OEI-03-01-00010  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 
protect the integrity of the Department of Health and Human Services programs as well as the 
health and welfare of beneficiaries served by them.  This statutory mission is carried out through a 
nationwide program of audits, investigations, inspections, sanctions, and fraud alerts.  The 
Inspector General informs the Secretary of program and management problems and recommends 
legislative, regulatory, and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General.  It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public.  The 
inspection reports provide findings and recommendations on the efficiency, vulnerability, and 
effectiveness of departmental programs. 
OEI's Philadelphia Regional Office prepared this report under the direction of Robert A. Vito, 
Regional Inspector General, and Linda M. Ragone, Deputy Regional Inspector General.  Principal 
OEI staff included: 
REGION  HEADQUARTERS 
David Tawes, Project Leader  Linda Frisch, Program Specialist 
To obtain copies of this report, please call the Philadelphia Regional Office at (800) 531-9562. 
Reports are also available on the World Wide Web at our home page address: 
http://www.hhs.gov/oig/oei  E X E C U T I V E   S U M M A R Y  
PURPOSE 
This report describes State Medicaid agencies use of revised average wholesale prices for 
certain prescription drugs. 
BACKGROUND 
Medicaid payments for prescription drugs totaled almost $12 billion in 1998, accounting 
for nearly 7 percent of all Medicaid expenditures.  Most State Medicaid agencies 
reimburse pharmacies based on the average wholesale price of a drug less a discount 
ranging from 4 to 15 percent.  States do not always use the same reimbursement for drugs 
administered directly by physicians.  Drug manufacturers report average wholesale prices 
to companies such as First DataBank and Medical Economics.  These companies compile 
pricing data for the pharmaceutical industry. 
Recently, a national investigation conducted by the United States Department of Justice 
and the National Association of Medicaid Fraud Control Units (NAMFCU) revealed that 
some drug manufacturers were reporting inflated average wholesale prices for certain 
products.  As a result, the two entities collected actual wholesale pricing data for 
approximately 400 national drug codes representing 51 drugs.  This data was provided to 
First DataBank, who calculated new average wholesale prices for the drugs, and 
subsequently made the revised prices available to State Medicaid programs.  The 
NAMFCU strongly encouraged States to make use of the revised prices, and anticipated 
that their implementation would result in a significant reduction in Medicaid 
reimbursement for the drugs involved. 
We gathered information from Medicaid representatives in 48 States and the District of 
Columbia.  We asked States about their drug reimbursement methodologies, whether or 
not they had implemented the revised average wholesale prices, and if they had any 
problems or concerns about these prices.  We also asked States that had implemented the 
revised prices to provide cost-savings estimates, if available. 
FINDINGS 
Thirty States use at least some of the revised average wholesale prices when 
determining drug reimbursement amounts 
Thirty States have incorporated the revised prices into their drug reimbursement 
methodology in some manner.  However, States vary considerably in their methods of 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  implementation.  Of the 30 States that have adopted the revised prices, 9 States use them 
for both pharmacy drugs and physician-administered drugs.  The remaining 21 States use 
the revised prices for pharmacy drugs only. 
States reported both advantages and disadvantages to using the revised prices 
Seven States expressed complete support of the efforts to revise drug prices.  These States 
noted that reported average wholesale prices are often extremely inflated, and they 
welcomed the efforts to obtain more accurate prices.  Seventeen States appreciated the 
intent of the revised prices, but questioned whether the effort was the best solution. 
Nearly all States reported that certain groups opposed the use of the revised average 
wholesale prices.  Opposition came from a number of sources, including hemophilia 
groups, pharmacies, infusion providers, physicians, and drug manufacturers. 
States using the revised prices believe they will lead to short-term cost-savings, 
but are unsure of the long-term impact 
Of the 30 States who are currently using the revised prices, 24 believed the prices will 
result in short-term cost-savings.  However, 20 of the 30 States either do not believe or 
are unsure that the new prices will lead to any long-term savings.  Seven States provided 
cost-savings estimates, with annual savings ranging from $800,000 to $7 million. 
CONCLUSION 
Over the last several years, the OIG has produced a significant body of work that clearly 
demonstrates the inflated nature of reported average wholesale prices.  Because most 
States base their reimbursement for drugs on average wholesale prices, this inflation has 
caused Medicaid to pay too much for certain products.  Therefore, we commend any 
efforts to obtain more accurate pricing for the Medicaid program. 
This report shows that some States are benefitting from the revised average wholesale 
prices prompted by the actions of the Justice Department and the NAMFCU.  However, 
States concerns about the revised prices indicate that attempting to lower reimbursement 
simply by further reducing average wholesale prices may not be an effective long-term 
solution.  Therefore, we continue to believe that the current systems reliance on reported 
average wholesale prices as a basis for drug reimbursement is fundamentally flawed. 
Agency Comments 
The CMS agreed with our conclusion that the reliance on reported average wholesale 
prices as a basis for drug reimbursement is problematic, and stated that they will continue 
to look for administrative and legislative solutions to this problem.  In addition, the CMS 
made two technical comments concerning items in the draft report.  We have addressed 
the technical comments in this final version of the report. 
ii 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  T A B L E   O F   C O N T E N T S  
PAGE

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  i

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FINDINGS

States Use of Revised Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

States Experiences with Revised Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Potential Cost Savings of Revised Prices  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

CONCLUSION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

APPENDICES

Use of Revised Average Wholesale Prices by State.  . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Centers for Medicare & Medicaid Services Comments . . . . . . . . . . . . . . . . . . . . . . . . . 12

iii 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  I N T R O D U C T I O N  
PURPOSE 
This report describes State Medicaid agencies use of revised average wholesale prices for 
certain prescription drugs. 
BACKGROUND 
Congress created Medicaid in 1965 under Title XIX of the Social Security Act.  Medicaid 
is a joint Federal and State program that provides medical assistance to individuals and 
families with low incomes and few resources.  Individual States establish eligibility 
requirements, benefits packages, and payment rates for Medicaid under broad standards 
set by the Centers for Medicare & Medicaid Services (CMS).  The Federal Government 
contributes between 50 and 83 percent of the Medicaid funding for each State.  In 1998, 
Medicaid helped provide approximately 40 million people with medical assistance, at a 
cost of over $175 billion. 
Medicaid Coverage of Prescription Drugs 
Federal guidelines require States to provide certain benefits, such as hospital and physician 
services, to their Medicaid recipients.  Each State also has the option of providing other 
Medicaid benefits, including prescription drugs.  Currently, all 50 States and the District of 
Columbia offer prescription drug coverage for Medicaid recipients.  Medicaid payments 
for prescription drugs totaled almost $12 billion in 1998, accounting for nearly 7 percent 
of all Medicaid expenditures. 
Most outpatient prescription drugs are covered by Medicaid.  However, States often have 
different reimbursement methods for drugs obtained through pharmacies versus drugs 
administered in physicians offices.  Drugs purchased from pharmacies are covered and 
reimbursed under States prescription drug programs.  In contrast, drugs administered by 
physicians are usually reimbursed through the physician payment process, and not the 
prescription drug program. 
Pharmacies use national drug codes to identify and obtain reimbursement for drugs 
covered under a States prescription drug program.  Each drug manufactured or 
distributed in the United States has a unique national drug code that identifies the 
manufacturer of the drug, the product dosage form, and the package size.  Physicians, 
however, often bill Medicaid for drugs on the HCFA 1500 claim form, which does not 
specifically request national drug code information.  On the HCFA 1500 form, drugs are 
identified by codes in the HCFA Common Procedure Coding System, hereinafter referred 
1 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  to as procedure codes.  Procedure codes define the type of drug and the dosage amount, 
but not the specific drug product or its manufacturer. 
Medicaid Drug Reimbursement Methodology 
Each Medicaid agency is required to submit a State plan to CMS describing its payment 
methodology for covered drugs.  Federal regulations require that each States 
reimbursement for a drug not exceed, in the aggregate, the lower of its estimated 
acquisition cost or the providers usual and customary charge to the public for the drug. 
However, CMS allows States flexibility in defining estimated acquisition cost. 
When reimbursing for a pharmacy drug, 43 State Medicaid agencies base their calculation 
of estimated acquisition cost on the drugs average wholesale price discounted by 4 to 17 
percent.  Four other States use wholesale acquisition cost plus  5 to 11 percent when 
calculating estimated acquisition cost.  Three States use a combination of both methods. 
Drug manufacturers report average wholesale prices to companies such as First DataBank 
and Medical Economics.  These companies compile pricing data for the pharmaceutical 
industry.  This pricing data is usually reported using national drug codes rather than 
procedure codes. 
For certain pharmacy drugs, States use the Federal Upper Limit and the State Maximum 
Allowable Cost programs in determining reimbursement amounts.  The CMS has 
established Federal upper limit payment amounts for over 200 drugs.  In addition, more 
than half of States have implemented a maximum allowable cost program to limit payment 
amounts for certain prescription drugs.  States vary considerably in the method by which 
this maximum allowable cost is calculated.  A small number of States use other pricing 
mechanisms for specific categories of drugs, such as blood factors used in the treatment of 
hemophilia.  These States may obtain prices directly from manufacturers, require invoices 
from providers that show actual acquisition costs, or calculate reimbursement through 
various other methods. 
Many States reimburse physician-administered drugs differently than pharmacy drugs. 
The majority of States still base reimbursement for physician-administered drugs on 
average wholesale price.  However, some States discount average wholesale prices by 
different amounts for physician drugs compared to pharmacy drugs, while other States 
subtract no discount at all.  Many physician-administered drugs are billed using procedure 
codes that do not have corresponding average wholesale prices.  Therefore, calculating 
reimbursement amounts for physician-administered drugs can be more complicated than 
for pharmacy drugs. 
Overall, most Medicaid States reimburse for drugs purchased from a pharmacy at the 
lower of the discounted average wholesale price, the Federal upper limit, the State 
maximum allowable cost, or the providers usual and customary charge.  States often 
reimburse for physician-administered drugs in a different manner, though most still use 
average wholesale price as the primary basis for determining reimbursement. 
2 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  Revised Drug Prices for Medicaid 
A recent investigation conducted by the United States Department of Justice and the 
National Association of Medicaid Fraud Control Units (NAMFCU) revealed that some 
drug manufacturers were reporting inflated average wholesale prices for certain products. 
The investigation suggested that these inflated prices have caused the Medicaid program 
to overpay substantially for these drugs.  As a result, the Justice Department and the 
NAMFCU collected actual average wholesale pricing data for approximately 400 of the 
more than 50,000 national drug codes presently in use.  These 400 codes represent 51 
injectable, infusion, and inhalation drugs.  The data was gathered from several wholesale 
drug catalogs. 
In a February 2000 letter to State Medicaid pharmacy directors, the NAMFCU stated that 
the pricing data had been given to First DataBank, the company that provides average 
pricing information to nearly all of the State Medicaid agencies.  First DataBank agreed to 
use this data to calculate revised average wholesale prices for the 51 drugs, and to 
subsequently make the revised prices available to the States.  In encouraging the States to 
take advantage of these revised prices, the NAMFCU wrote: 
This revised procedure does not change the terms of the companys [First 
DataBanks] contract with your State, but merely provides an improved 
means for First DataBank to provide more accurate information to the 
States.  More importantly, in view of the Medicaid programs legal 
obligation to reimburse true provider acquisition costs, such an effort by 
the States to ensure that payment is based on actual prices is mandatory. 
According to the letter, Medicaid agencies may make changes to the list of national drug

codes with revised prices.  First DataBank agreed that every six months it would collect

information from wholesale catalogs when updating prices for the approximately 400

national drug codes.  The NAMFCU anticipated that the use of the revised prices would

result in a significant reduction in reimbursement for the drugs involved.

First DataBank began reporting the revised average wholesale prices to States on 

May 1, 2000.  However, some States did not wish to use the revised prices, and requested

that First DataBank continue to supply the original prices instead. 

METHODOLOGY 
We reviewed relevant information about the Medicaid program, specifically materials 
relating to Medicaid drug reimbursement.  In addition, we obtained correspondence from 
First DataBank and the NAMFCU concerning the implementation of the revised average 
wholesale prices. 
3 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  Data Collection and Analysis 
We conducted telephone interviews with Medicaid representatives in 48 States and the 
District of Columbia, hereinafter referred to as a State.  Whenever possible, the interview 
was conducted with the States drug program administrator.  We did not speak with 
Medicaid staff from Arizona because the States drug benefit is administered completely 
through managed care organizations and not the traditional fee-for-service system. 
Representatives of Maines Medicaid program did not respond to our request for an 
interview.  In this report, we use the word State to denote both a State Medicaid 
agency and State Medicaid agency representative. 
Before contacting the States, we developed questions about the revised average wholesale 
prices with the assistance of CMS staff and two State drug program administrators.  We 
asked States about their drug reimbursement methodologies, whether or not they had 
implemented the revised average wholesale prices, and if they had any problems or 
concerns about these prices.  We also asked States that had implemented the revised 
prices to provide cost-savings estimates.  However, we did not validate the cost-savings 
estimates reported by States.  We also gave each State an opportunity to discuss any other 
issues they felt needed to be addressed concerning the revised average wholesale prices. 
We collected this data between January and March 2001. 
4 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  F I N D I N G S  
Thirty States use at least some of the revised average 
wholesale prices when determining drug reimbursement 
amounts 
Thirty States have incorporated the revised prices into their drug reimbursement 
methodology in some manner.  However, States vary considerably in the methods of 
implementation.  For the most part, States use these prices as one of the factors in 
calculating a drugs reimbursement amount.  States continue to use Federal upper limits, 
State maximum allowable costs, and various other pricing methods in combination with 
the revised average wholesale prices calculated by First DataBank. 
Because the revised average wholesale prices are based on national drug codes, many 
States have found it difficult to use them for physician-administered drugs, which are 
usually reimbursed by procedure code.  Of the 30 States that have adopted the revised 
prices, nine States use them for both pharmacy drugs and physician-administered drugs. 
The remaining 21 States use the revised prices for pharmacy drugs only.  A table outlining 
how each State uses the revised prices is provided in appendix A. 
Some States do not use the revised prices for certain drug products.  For example, two 
States discontinued using the revised prices for blood factors.  Three other States that 
base reimbursement primarily on wholesale acquisition cost or direct pricing use the 
revised prices only when these other prices are not available.  One State cannot use the 
revised average wholesale prices for certain claims because First DataBank refused to 
provide the revised prices to one of the States contractors. 
Eleven States do not take a percentage discount off the revised average 
wholesale prices 
When determining reimbursement, States generally subtract a percentage discount from 
the drugs average wholesale price.  However, 11 of the 30 States that use the revised 
prices do not subtract this percentage discount when paying for drugs that have revised 
prices.  Several States reported that the revised average wholesale prices are closer to a 
true acquisition cost; therefore, subtracting a percentage discount may actually make the 
reimbursement amount fall below a providers acquisition cost.  They remarked that if 
providers were reimbursed below cost, they would simply stop providing these drugs, 
which could limit a patients access to care. 
Several other States have considered eliminating the percentage discount when 
determining reimbursement for the drugs with revised prices.  However, these States are 
5 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  unsure they have the authority to change their reimbursement methodology for this small 
group of drugs without undertaking significant administrative and/or legislative actions. 
States reported both advantages and disadvantages to using 
the revised prices 
Some States were completely supportive of the efforts to revise prices 
Seven States reported only positive opinions about the revised prices.  These States noted 
that reported average wholesale prices are often extremely inflated, and they welcomed 
the Justice Departments and NAMFCUs efforts to obtain more accurate prices.  One 
State pharmacy director said, This kind of pricing information should be aggressively 
pursued by First DataBank, the OIG, and HCFA.  Two other pharmacy directors hoped 
that the revised pricing would be expanded to even more drugs. 
Other States appreciated the intent of the revised prices, but questioned whether 
the effort was the best solution 
Seventeen States supported the efforts to revise prices, but had concerns with the specific 
actions taken.  Four of these States believed that attempts to reduce excessive 
reimbursement for prescription drugs should not be based on determining more accurate 
average wholesale prices.  According to these States, basing payment on the actual 
acquisition cost of a drug or on the average manufacturers price reported to CMS under 
the Medicaid Drug Rebate Program is a much more effective solution.  The other 13 
States did not report problems with the use of average wholesale prices in general. 
Rather, they cited concerns about the particular drugs included in the revisions and 
questioned how the revised prices would be updated. 
Several States noted that the drugs chosen for pricing revisions were mainly infusion and 
injectable products that did not amount to a significant portion of Medicaid drug spending. 
One respondent termed these drugs small potatoes, and felt that price reductions should 
have been targeted to a different class of products such as oral tablets.  Others noted that 
basing the revisions on specific national drug codes rather than entire drug classes could 
potentially limit the effectiveness of the revisions. 
States also expressed concern about the process of updating the revised prices.  Even 
though First DataBank is required by its agreement with the NAMFCU to collect updated 
prices for these drugs, some States reported that First DataBank expressed little interest in 
updating the revised prices.  According to these States, First DataBank only planned on 
reporting revised prices based on what the Justice Department and the NAMFCU 
provided them.  Meanwhile, States were unsure if the Justice Department and the 
NAMFCU were planning to provide updated pricing information to First DataBank and/or 
add any new national drug codes to the pricing revisions. 
6 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  Some States felt these problems were never addressed because the Justice Department and 
the NAMFCU sought little or no input from State drug program administrators. 
According to one State, many of the concerns States have with the revised prices could 
have been avoided if the drug program administrators had been included in the 
decision-making process. 
States reported that certain groups opposed the use of the revised average 
wholesale prices 
Forty-three States reported receiving complaints about the revised prices.  These 
complaints were from a number of sources, including hemophilia groups, pharmacies, 
infusion providers, physicians, and drug manufacturers.  All asserted that the revised 
prices were too low.  Some hemophilia providers claimed that they would be unable to 
continue treating Medicaid recipients unless the prices for blood factors were raised. 
These complaints were instrumental in two States decisions to discontinue the use of the 
revised prices for blood-factor products, and have caused other States to contemplate the 
same action.  In addition, some States volunteered that they had asked drug providers for 
invoices to substantiate claims that the revised prices were below acquisition costs.  These 
States reported that invoice data was either not provided, or provided only for a very 
small number of drug codes (less than 10).  In these cases, the States made revisions to 
prices based on the invoice data. 
The majority of the 19 States that are not using the revised prices felt that the prices may 
be too low, especially when a percentage discount is subtracted.  Four of these 19 States 
actually used the revised prices at one time, but later reversed their decisions.  Some 
States noted they checked with area wholesalers and distributors, and subsequently 
determined that the revised prices were not readily available to providers in their State. 
States using the revised prices believe they will lead to 
short-term savings, but are unsure of the long-term impact 
Of the 30 States currently using the revised prices, 24 believed there will be short-term 
cost savings.  These States reported that short-term savings were inevitable due to 
significant per-unit price reductions for these drugs.  However, some States suggested the 
savings would be small because there was low utilization for the drugs with revised prices, 
or that utilization for these drugs would simply shift to other products. 
Seven States provided an estimate of annual cost savings that would result from their drug 
price revisions.  Each of these estimates was based on the assumption that utilization 
would remain constant.  The States estimated annual savings between $800,000 and $7 
million. 
Twenty of the 30 States using the revised prices either did not believe or were unsure that 
the revised prices would result in long-term cost savings.  Many of these States felt that 
7 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  providers and manufacturers would find ways to circumvent the new prices.  For instance, 
manufacturers could obtain new national drug codes for products with revised prices and 
report a higher average wholesale price for the new code.  Because First DataBank only 
reported revised prices for the national drug codes that were supplied by the Justice 
Department and the NAMFCU, Medicaid would pay the higher prices reported for the 
newly-issued national drug codes.  Furthermore, because the revised prices were issued on 
a product-specific and not a drug-class level, providers could substitute drugs with higher-
priced national drug codes in place of codes with revised prices. 
8 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  C O N C L U S I O N  
Over the last several years, the OIG has produced a significant body of work that clearly 
demonstrates the inflated nature of reported average wholesale prices.  Because most 
States base their reimbursement for drugs on average wholesale prices, this inflation has 
caused Medicaid to pay too much for certain products.  Therefore, we commend any 
efforts to obtain more accurate pricing for the Medicaid program. 
This report shows that some States are benefitting from the revised average wholesale 
prices prompted by the actions of the Justice Department and the NAMFCU.  However, 
States concerns about the revised prices indicate that attempting to lower reimbursement 
simply by further reducing average wholesale prices may not be an effective long-term 
solution.  Therefore, we continue to believe that the current systems reliance on reported 
average wholesale prices as a basis for drug reimbursement is fundamentally flawed. 
Agency Comments 
The CMS agreed with our conclusion that the reliance on reported average wholesale 
prices as a basis for drug reimbursement is problematic, and stated that they will continue 
to look for administrative and legislative solutions to this problem.  In addition, the CMS 
made two technical comments concerning items in the draft report.  We have addressed 
the technical comments in this final version of the report.  The full text of CMS comments 
is presented in Appendix B. 
9 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  APPENDIX A 
Use of Revised Average Wholesale Prices by State

Uses Revised Prices for  Uses Revised Prices for Subtracts Discount from 
State  Pharmacy Drugs  Physician Drugs  Revised Price 
Alabama 1  x  x  x 
Alaska  x 
Arizona 
Arkansas 
California 
Colorado 
Connecticut  x  x 
Delaware  x  x 
District of Columbia 2  x  x 
Florida  x 
Georgia 
Hawaii 3  x  x  x 
Idaho 4  x  x 
Illinois  x 
Indiana 2  x  x  x 
Iowa 
Kansas 4  x  x 
Kentucky 5 
Louisiana 
Maine 
Maryland  x  x 
Massachusetts 
Michigan 
Minnesota 5 
Mississippi 
Missouri 5 
Montana  x 
Nebraska 
Nevada  x  x 
New Hampshire  x  x 
New Jersey  x 
New Mexico  x  x 
New York  x  x 
North Carolina 
10 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  APPENDIX A 
Uses Revised Prices for  Uses Revised Prices for Subtracts Discount from 
State  Pharmacy Drugs  Physician Drugs  Revised Price 
North Dakota 5 
Ohio 1  x  x 
Oklahoma  x  x 
Oregon 4  x  x  x 
Pennsylvania  x  x  x 
Rhode Island 
South Dakota 
South Carolina  x  x  x 
Tennessee 6  x  x 
Texas 1, 4  x 
Utah  x 
Vermont  x  x 
Virginia 
Washington  x 
West Virginia  x 
Wisconsin 7  x  x  x 
Wyoming 
Source: OIG Survey of Medicaid States, January - March 2001 
1 
State does not use revised prices for many of the affected drugs because State relies on methods other than 
average wholesale price as its primary reimbursement methodology. 
2 
State no longer uses revised prices for blood-factor products based on complaints from providers. 
3 
Revised prices not available to all State contractors. 
4 
For a small number of national drug codes, State no longer uses revised prices since invoices sent by providers 
indicated prices were too low. 
5 
State used revised prices at one time, but no longer does so. 
6 
Most drugs are paid through a managed care organization. Only drugs provided to dual-eligible 
Medicare/Medicaid  recipients and behavioral-health drugs are reimbursed through the pharmacy program. 
7 
State does not use revised prices for drugs with State maximum allowable costs. 
11 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  APPENDIX B 
Health Care Financing Administration Comments

12 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010  APPENDIX B 
13 
Medicaids Use of Revised Average Wholesale Prices  OEI-03-01-00010