Drug Makers Continue to Flout "Best Price" Law, and Predictions are Compliance is About to Get Worse
By Sharon Treat, NLARx Executive Director
Yesterday New York Times reporter Robert Pear reported on drug makers' noncompliance with the federal law that requires reporting of pricing data and giving medicaid programs the "best price." the story, "Drug makers accused of ignoring price law," is here. Pear stated: "Drug manufacturers often flout a federal law that requires them to provide the government with pricing data needed to calculate discounts on medications prescribed for poor people under Medicaid, federal investigators say in a new report. The information is not submitted at all, is filed late or is incomplete, the investigators said, and as a result Medicaid overpays for prescription drugs." Pear noted that the problem, according to federal investigators, "could become more significant under President Obama’s new health care law, which increases the amount of the discounts and promises to add millions of people to the Medicaid rolls."
A new initiative is intended to force compliance. Daniel R. Levinson, the inspector general at the Department of Health and Human Services, who led the investigation, said he would impose civil fines on drug manufacturers that fail to meet their price-reporting obligations. Under federal law, the government can impose penalties of $10,000 a day on a drug manufacturer that fails to provide the information “on a timely basis.” The government has had this authority since 1990 but has not used it, the inspector general said.
We have previously discussed this issue and the problems raised by drug makers failing to provide data. We are aware of 3 states that have laws or rules requiring that these companies directly report this pricing data to their Medicaid programs - Maine, Texas and Vermont. We strongly urge all states to adopt enabling legislation that will give them direct access to this data - and the authority to penalize and bring enforcement actions - so that they can accurately determine whether the drug makers are sending back to them the full value of the rebates they owe the states. A model bill is posted on our website.
At our summer NLARx meeting in Portland, Maine, Jude Walsh, formerly pharmaceutical policy advisor to Maine Governor Baldacci and now with Goold Health Systems, presented in detail the issues facing states and the potential that they will lose significant medicaid funding due to lack of compliance and access to data.
According to the Pear article, Medicaid officials contend that “they do not currently have the resources” to identify all the manufacturers that fail to submit the data. This is all the more reason for states to act. We are talking about really significant cost increases, at a time when states cannot afford even to pay the costs they currently incur. For example, according to Ms. Walsh's presentation, the State of Maine gets back about 50% of the cost of its medicaid drug purchasing through aggressively negotiating supplemental rebates. Luckily, Maine already has a law giving it authority to collect pricing data and bring enforcement actions for failure to comply. What about YOUR state?
Sharon Treat
www.reducedrugprices.org
207.622-5597
