New York Medicaid Program Missing $20 Million in Drug Company Rebates, Audit Finds

New York state "failed" to collect from drug manufacturers almost $20 million under a Medicaid rebate program, according to an audit by the state comptroller's office, the Albany Times Union reports. Overall, the state spent more than $5 billion on Medicaid drug costs between January 1998 and June 2000 and received about $918 million in rebates from drug firms under a 1991 federal law creating a discount for drugs sold under Medicaid. However, a review of the state's Medicaid program found that "money is slipping" away from the program, particularly in "three main" areas. First, hospital pharmacies "overbilled" the state $9.9 million by "leaving out the average 40% discount" on prescription drugs. Next, auditors found $23 million in "uncollected" prescription rebates from manufacturers that "disputed the amount they owed." Finally, auditors determined that the state does not have an adequate system to track down money owed by individual manufacturers. Department of Health spokesperson John Signor said a new computer system will "address the gaps" in rebate collection, but added that the program will not be ready for "several years." The Times Union reports that the Health Department likened the "outstanding money" to "accounts receivable" by a business, but the comptroller noted "some of the debts go back a decade" (Jochnowitz, Albany Times Union, 10/5).