The Center for Medicare and Medicaid Services (CMS) did not take necessary steps to verify that manufacturers were offering their best prices to the program, the Government Accountability Office (GAO) report found.
About 53 million Americans are enrolled in the joint state-federal Medicaid program, including many low-income household children and elderly patients in nursing homes.
States pay for the medications, then seek reimbursement from manufacturers. Drugmakers determine the best price and the average wholesale price, using both measures to determine reimbursement. CMS officials are charged with overseeing how the firms set those prices.
Next year, about 6.3 million Medicaid beneficiaries who are also eligible for Medicare, the insurance program for the elderly, will have their medicines paid for under a new Medicare drug benefit discount program.
The fallout is just beginning. Watch for more on this developing story.