Five Brand-Name Drug Manufacturers Overcharged ADAPs, Other ‘Safety Net’ Providers $6.1 Million for Drugs, HHS OIG Says
Five brand-name drug manufacturers have overcharged AIDS Drug Assistance Programs, community health centers and other "safety net" providers $6.1 million for prescription drugs, according to a report released Tuesday by the HHS Office of the Inspector General, Reuters Health reports (Pallarito, Reuters Health, 3/26). The drug companies, which are not identified in the report, charged the clinics and programs approximately $13.7 million instead of $7.6 million for 11 brand-name drugs, which are also not identified, in the fiscal year ending Sept. 30, 1999 (Washington Post, 3/27). All of the providers are participants in the U.S. Public Health Service's 340B program, a drug discount program that allows high-Medicaid hospitals, ADAPs and community health clinics to purchase drugs at prices comparable to or lower than those paid by Medicaid. The drug prices for 340B providers are based on the rebate amounts that companies agree to provide for Medicaid. The rebates are based on the "best price," or the lowest price, at which a drug is sold to any organization. The inspector general found that the drug manufacturers failed to include in their calculations of the drugs' best price the price of the drugs sold to HMO "repackagers," which buy drugs in bulk and then repackage them in smaller quantities for distribution. The exclusion from the best price calculations of these sales -- which are usually made at the lowest price for any organization -- resulted in the $6.1 million in excess charges (Reuters Health, 3/26). The report recommends that the Centers for Medicare and Medicaid Services require the companies to report the extent of the overcharging for the 11 targeted drugs, as well as for all other drugs sold to 340B entities, and to develop a refund or credit plan for the providers (Office of Inspector General report, March 2003). "I think this is just the tip of the iceberg," Ted Slafsky, director of the Public Health Pharmacy Coalition, which represents 340B program participants, said, adding, "If they look at this more closely, we believe that there will be many examples of overcharges" (Reuters Health, 3/26).This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.