Medicaid fails to check drug pricing - report

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U.S. Medicaid officials failed to properly check the prices drug companies charge the health insurance program for the poor and disabled, according to a government report released on Monday.

The Center for Medicare and Medicaid Services (CMS) did not take necessary steps to verify that manufacturers were offering their “best prices” to the program, the Government Accountability Office (GAO) report found.

The Health and Human Services Department’s (HHS) Office of the Inspector General has also found problems with CMS’ pricing oversight, issuing four reports on the issue since 1992.

“However, CMS has not followed up with manufacturers to make sure that the identified problems with prices and price determination methods have been resolved,” the GAO said.

About 53 million Americans are enrolled in the joint state-federal Medicaid program, including many low-income household children and elderly patients in nursing homes.

Rep. Henry Waxman, the top Democrat on the House of Representatives Government Reform Committee, said some drug makers were not giving states the same discounts they gave to other bulk buyers.

“These problems could be fixed, but the agency has been dragging its feet for years,” said Waxman, from California.

HHS officials rejected the report’s conclusion and said in a letter to the GAO that “work continues on this topic with a number of reviews planned and underway.”

But officials agreed the agency could make clearer guidelines for the drug industry in setting their price lists. More guidelines on the role of pharmacy benefit managers who negotiate prices “would be helpful.”

States pay for the medications, then seek reimbursement from manufacturers. Drugmakers determine the best price and the average wholesale price, using both measures to determine reimbursement. CMS officials are charged with overseeing how the firms set those prices.

“Because drug companies can pick their own methods, they in effect set their own prices and the amount of rebates they pay,” said Senate Finance Committee Chairman Sen. Charles Grassley, an Iowa Republican who requested the report with Waxman.

He added that an earlier GAO report showed CMS allocated $26,000 and eight employees for a Medicaid integrity program.

Next year, about 6.3 million Medicaid beneficiaries who are also eligible for Medicare, the insurance program for the elderly, will have their medicines paid for under a new Medicare drug benefit discount program.

U.S. officials have said the new benefit will help Medicaid save money, but some critics say patients could get lost in the bureaucratic shuffle and lose their drug coverage altogether. Officials have vowed a smooth transfer. 

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