Pharmaceutical Firms Owe State $1.3 Billion, Federal Audit Finds
Pharmaceutical companies owe California about $1.3 billion in rebates, according to an audit conducted by the HHS Office of Inspector General, the Orange County Register reports. According to the audit, state health officials failed to collect rebates that pharmaceutical companies owed under a 1990 federal law that requires drug makers to sell prescription drugs to state health programs at a reduced rate. Medi-Cal in 2004 is expected to spend $5 billion on drugs and collect about $1.5 billion in rebates, Stan Rosenstein, Department of Health Services' deputy director of medical care services, said. The audit also found that state accounting system failures and incomplete documentation contributed to the backlog of rebates, some of which date from 1991.
An audit of state government conducted last year by Finance Director Donna Arduin did not include the uncollected rebates (Hinch, Orange County Register, 1/31). Gov. Arnold Schwarzenegger's (R) proposed fiscal year 2004-2005 budget would reduce state funding for health care programs by more than $900 million, with about $880 million in spending cuts to Medi-Cal, including a provider reimbursement rate cut of 10%. In addition, the proposal would cap enrollment in Healthy Families at its current level of about 732,000 children and would increase monthly premiums from $9 to $15 per child for some Healthy Families beneficiaries (California Healthline, 2/2). "It is outrageous that we're not collecting this money while the governor is proposing cutting programs for poor people and kids," Assembly member Dario Frommer (D-Glendale) said. Carmela Castellano, CEO of California Primary Care Association, said, "California's budget crisis makes it imperative that the state efficiently utilize all of its revenue steams before cutting vital medical safety-net programs. It should be a top priority to collect these rebates." Rosenstein said that the amount owed to the state is $818 million, not $1.3 billion, noting that a new billing system and 11 additional staff members "enabled health officials to reduce billing errors," the Register reports. Frommer said he would call legislative hearings to discuss the audit (Orange County Register, 1/31).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.