Report points to delays on Medicare drug pricing audits

The Centers for Medicare and Medicaid Services has yet to complete the majority of its scheduled audits of 2006 drug pricing information that aim to protect the government from pricing fraud, according to a Government Accountability Office report released Thursday.

CMS is required to review pricing data for private insurers that participate in the Medicare Part D prescription drug program to ensure the government and taxpayers reap the benefits of any price concessions, such as discounts or rebates, that insurers or their pharmacy benefit managers negotiate with pharmaceutical companies.

House Oversight and Government Reform Committee Chairman Henry Waxman, D-Calif., said Thursday he is disappointed in the delay and vowed to continue his committee's work of investigating waste and inefficiencies in the Medicare Part D prescription drug program. CMS received the drug pricing information in July 2007 and plans to complete half of the 169 audits this month and finish up the rest by October 2009, according to the report.

As of July 11, CMS received the result of one audit report, which found no discrepancies, GAO reported. CMS told GAO the second half of the audit work was delayed because of budget constraints, but Medicare officials do not expect 2007 audits to be similarly delayed.

Medicare officials requested $118 million in fiscal 2007 and $183 million in fiscal 2008 to fully fund oversight activities, but Congress did not enact either request, CMS Acting Administrator Kerry Weems noted in a letter to GAO.

Democrats are highly critical of the Part D program, passed into law in 2003 under a Republican Congress, because it is administered by private insurance plans. Waxman's investigators found in July that private insurers were not negotiating significant price concessions. Investigators found Part D pays on average 30 percent more for pharmaceuticals than government-run Medicaid, resulting in a $3.7 billion windfall for drugmakers. Many health policy experts believe Democrats will attempt next year to institute Medicaid price discounts in the Part D program.