Department of Social Services

Medicaid Drug Rebate Program

Under the Medicaid drug rebate program, the Department reimburses pharmacies that dispense certain prescription drugs to Medicaid recipients. The Department then requests rebates for the drugs from the drug manufacturers. During the 30 months covered by our audit, the Department collected $244 million in such rebates.

We identified weaknesses in Department procedures for requesting and accounting for the rebates, as the Department requested far more from the drug manufacturers than was due and could not determine the amount of rebates that had yet to be collected. We estimated that, at the time of our audit, the Department had yet to collect $44 million in outstanding rebates. However, this estimate could not be confirmed by Department records. We recommended that the Department develop an automated system to account for the drug rebates. 94-S-5