Some State Medicaid Programs Pay More for Prescription Drugs, HHS OIG Report Finds
Some states' Medicaid programs pay 12% to 4,073% more than others for prescription drugs, and data that would help them negotiate lower prices is withheld by the federal government, according to an HHS Office of Inspector General study released Friday, the Boston Globe reports. The study was based on Medicaid prices paid for a sample of 28 brand-name and generic medications in 2001. New Jersey was the highest-paying state, with an average of $200 more paid per prescription compared to Michigan, the lowest-paying state.
According to the report, state and federal government Medicaid savings for the sampled medications could have totaled $86.7 million -- a 13% reduction in spending for those drugs -- if all states had paid the lowest prices. OIG did not make a total estimate, but the Globe reports that a 13% reduction in states' total Medicaid prescription spending each year could save almost $4 billion annually. The report recommended that CMS give states access to "average manufacturer price data," which are used by federal Medicaid officials to calculate state rebates.
The price data are not passed on to individual states because of "issues associated with average manufacture price data confidentiality," the report states. Instead, states only have access to the average wholesale prices, which are published by pharmaceutical companies. AWPs have been the focus of several lawsuits and large-scale fraud settlements with the manufacturers. Last year Bayer and GlaxoSmithKline paid "tens of millions in fines" after admitting they concealed the best prices of their medications from the government, the Globe reports.
HHS Deputy Inspector General George Grob said that because the studied drugs were "only a small part" of the drugs Medicaid purchases, "the odds are very high that similar problems are going on across the board. It could be a much, much higher loss to the program, and it is enough to really give people cause for concern."
Senate Finance Committee Chair Chuck Grassley (R-Iowa) said the report "raises alarms that warrant immediate attention and action." He added, "I can think of 86.7 million reasons why [CMS] should fix this problem" (Rowland, Boston Globe, 9/28). The OIG report is available online. Note: You will need Adobe Acrobat Reader to view the report.