Lax oversight causing drugmakers to dish out duplicate 340B, Medicaid discounts, GAO finds

Lax oversight by the federal government is causing drugmakers to pay discounts for the same drug twice, according to a new report released this week from the U.S. Government Accountability Office.

Drugmakers must participate in both the 340B drug discount program and Medicaid drug rebate program if they want their product covered by Medicaid. 

The 340B program allows hospitals that serve a large number of low-income and uninsured patients to buy outpatient drugs at a discount. The rebate program allows state Medicaid plans to request rebates from pharmaceutical manufacturers on certain drugs dispensed to their members.

Discounted drugs that hospitals buy through 340B don't qualify for the Medicaid rebates.

But the GAO found that lax oversight of these programs is making drugmakers pay duplicative discounts. In other words, they are giving a rebate to the state and a discount to hospitals participating in 340B.

The report found that CMS doesn't track or review the policies states implement to prevent drugmakers from paying the Medicaid rebate and the 340B discount. And procedures states use are not always effective, the report said.

The Health Resources and Services Administration, which administers the program, doesn't have procedures in place to prevent these duplicate discounts either, according to the GAO.

The GAO is recommending CMS ensure that state Medicaid programs have written policies and procedures in place to prevent the duplicate discounts. 

The GAO also recommends that the HRSA ensures compliance with any procedures CMS introduces. The GAO also is recommending that HRSA require state entities or hospitals to repay drugmakers if they received duplicate discounts. 

Editor's Note: This article was updated Jan. 29, 2020 to clarify the entity recieving the discount.

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