Legal Matters

HHS Tightens Scrutiny of Compliance With Medicaid Drug Rebate Program Regulations (Part 6 of 6)

From Drug Benefit Trends®Posted 02/12/2004

By Diane Ung, JD; George Kenny, JD



As rising costs of prescription drugs are consuming larger percentages of Medicaid budgets, federal and state governments have become more committed to reducing the risk of fraud, abuse, and waste arising from drug rebates and, accordingly, are increasing their scrutiny of pharmaceutical manufacturers' compliance with drug rebate policies. These efforts are paying off, as demonstrated by the huge settlements obtained against pharmaceutical companies thus far. Moreover, in its recently released "Work Plan for 2004," the OIG has indicated that it will evaluate the adequacy of drug manufacturers' methodologies for computing AMP and best price, noting that previous reviews conducted in the 1990s had uncovered numerous shortcomings. States are also becoming more diligent in their administration and enforcement of drug rebate collections.

Thus, prescription drug benefits are expected to receive more press coverage and government scrutiny in the coming years. Accordingly, it is critical for any player in the pharmaceutical industry to adhere to current price-reporting policies; understand new reporting and record-keeping requirements; and ensure compliance with Medicaid's, Medicare's, and other public programs' drug benefit requirements.


Drug Benefit Trends 16(1):16-18, 2004. © 2004 Cliggott Publishing, Division of CMP Healthcare Media

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