Medicaid to get tougher on drug makers’ price reporting

Introduction

The federal overseer of Medicaid plans to crack down on drug makers that fail to submit complete monthly and quarterly price information for prescription drugs, a violation that carries civil penalties, the Health and Human Services Department watchdog says.

In 2008, more than half of 579 drug makers failed to submit at least one of their required quarterly reports of average manufacturer prices (AMP) to the Centers for Medicare and Medicaid Services, the inspector general said in a new report. They were even worse with monthly reporting obligations: More than three-fourths of them submitted late, incomplete, or no AMPs in at least one month of 2008, the watchdog said. No companies were named in the report.

The price information is required by federal law to help calculate rebates owed to states for Medicaid drugs, and to set ceiling prices for Medicaid prescriptions. Violators face a $10,000 per day civil fine, and can be suspended from the program if they still haven’t submitted the price data 90 days after the federal deadline.

“Because AMP data play such a critical role in government payments for prescription drugs, Centers for Medicare and Medicaid Services must ensure that action is taken against noncompliant manufacturers,” the inspector general said. In response to the findings, the agency overseeing Medicaid promised to step up enforcement and take action against drug companies that miss monthly or quarterly deadlines, the report said.

FAST FACT: In 2008, Medicaid paid $24 billion for prescription drugs based on the “estimated acquisition cost” plus a reasonable dispensing fee. Medicaid provides medical care to poor families and is jointly funded by federal and state governments.

Other new watchdog reports released by the Government Accountability Office (GAO), various federal Offices of Inspector General (OIG), and other government entities:

FINANCE

• Treasury Department’s Bureau of Public Debt gets clean audit for its management of $2.6 trillion in federal trust funds in the year ended July 31, 2010 (OIG).

NATIONAL SECURITY

• Energy Dept. is still not terminating security clearances promptly and some clearances remained active up to four months after a DOE employee left (OIG).
• Pentagon should report actual appropriations and spending for countermeasures to fight weapons of mass destruction to show how anti-WMD translates into Defense Dept. funding priorities (GAO).
• State Dept. can’t identify total value of U.S. weapons sales to Middle East countries because its database also captures arms transfers for American bases in region (GAO).

HEALTH

• Medicare fraud within the U.S. Indian Health System generally involves mismanagement, employee misconduct, or drug theft (OIG).

ENVIRONMENT

• Army Corps of Engineers’ projects to restore habitats along Missouri River are not significantly changing the size of the oxygen-depleted dead zone in Gulf of Mexico (National Research Council).

MISC.

• Education Dept. paid for information technology protection services it didn’t receive and has yet to adequately safeguard its IT network (OIG).
• Pay difference between men and women managers in key U.S. industries narrows slightly, with women earning an estimated 81 cents for every dollar earned by men managers in 2007 (GAO).