Investigators find Medicaid overpays for Rx drugs

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The federal government is failing to enforce the law requiring drug companies to cut prices on drugs bought for Medicaid recipients, Congressional investigators said yesterday.
A report in today's New York Times said investigators from the Government Accountability Office (GAO) discovered that the federal Medicaid agency rarely verified the accuracy of price data reported by drug manufacturers and used to compute the discounts required by law.
Even when errors and problems are found in the data, the federal government does not force drug companies to make corrections, the investigators said.
In buying branded drugs, Medicaid is entitled to the best price charged to any buyer, with few exceptions. GAO found that manufacturers sometimes concealed the best prices so they would not have to give the same discounts to Medicaid. In the case of one drug maker, Congressional auditors found that proper accounting would have increased savings to Medicaid by 16 percent, investigators said.
But drug companies told the investigators they had not received clear guidance form the government on how to define or calculate "best price."
In a written response to the GAO's findings, federal Medicaid officials said it would be helpful for them to provide clear guidance on how to perform such calculations.
The Bush administration has publicly denied charges that it was providing inadequate oversight and suggested the government lacked the resources to verify data used for hundreds of drugs.
Investigators found that in one case, SP agreed last year to pay $345 million to the federal government and 50 state Medicaid programs, to resolve civil and criminal charges of fraud in the pricing of Claritin. The government said SP had concealed its best price, leaving Medicaid to pay far more than two managed care companies. The government learned of the case through a complaint filed by three former SP employees, the Times report said.
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