Follow-Up Audit of the Medicaid Drug Rebate Program in California

The objectives of this audit were to determine whether the State agency had (1) implemented the recommendations made in our previous audit of the California drug rebate program and (2) established controls over collecting rebates on single source drugs administered by physicians. We found that the State agency (1) implemented the prior recommendation related to dispute resolution and (2) established controls over collecting rebates on 81 single source drugs administered by physicians. However, the State agency did not fully implement the previous recommendation regarding quarterly reporting.

We recommended that the State agency ensure that the system change scheduled for implementation provides documentation to support rebate amounts reported to CMS. In written comments on the draft report, the State agency addressed our recommendation by stating that it is working on a system change that will enable it to capture and document the data to support rebate amounts reported to CMS quarterly. The change is scheduled to be implemented by July 15, 2008.