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Medicaid Paying for Unapproved Drugs

Nov 25, 2008 | Parker Waichman LLP It seems that Medicaid has paid nearly $200 million in the past four years alone for medications that, while covered under the plan, have not been reviewed for safety and efficacy, according to Reuters.

The Associated Press (AP) reviewed government data and found that Medicaid covered close to $198 million in costs from 2004 and 2007 for over 100 drugs that never received U.S. Food and Drug Administration (FDA) approval.  And, while the FDA says it is working to remove unapproved drugs from the market, there are some federal laws which enable Medicaid to provide coverage for them. According to the AP, Medicaid officials admit knowledge of the problem, but need congressional assistance since Medicaid and the FDA are part of the U.S. Department of Health and Human Services (HHS).  Worse, says the AP, millions of nonMedicaid patients are taking some of these medications and dozens of deaths have been linked to them.

Apparently, some of the drugs were introduced in the early 1960s, before the FDA increased its monitoring efforts and approval processes, says the AP.   The FDA has never created and released a “master list of unapproved drugs,” which it believes makes up about two percent—or 72 million—of all prescriptions filled, says the AP.  

"I think this is something we ought to look at very hard, and we ought to fix it," Medicaid chief Herb Kuhn told the AP. "It raises a whole set of questions, not only in terms of safety, but in the efficiency of the program—to make sure we are getting the right set of services for beneficiaries,"

The AP also reported that  Senator Charles Grassley, Republican-Iowa, asked that the HHS inspector general investigate the issue.  "The problem I see is bureaucrats don't want to make a decision.  There is no reason why this should be such a house of mirrors when so much public money is being spent," Grassley told the AP.

The AP noted that when Congress ordered the FDA to review all new medications for effectiveness in 1962, there were thousands of drugs on the market intended for inclusion in the review; however, some drug makers claimed that their medications were “grandfathered” under prior regulations as well as that bill.  The FDA remains unconvinced on this point, says the AP.

Medicaid is a government-run program available to certain low-income individuals and families that pays health care providers for part or all of some medical services.  Because Medicaid is state-administered, each state has its own guidelines concerning eligibility and services.

Late last month, Reuters reported that officials stated that spending on Medicaid was expected to increase “at a much higher rate than the overall U.S. economy."  According to Reuters  spending increases of about 7.3 percent from 2007 to 2008 for a total of $339 billion are likely,  with increases expected to continue through the next decade.

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