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Executive Summary

STATE MEDICAID DUR IMPLEMENTATION WILL BE MONITORED BY HHS IG, according the Office of the Inspector General's "Workplan for Fiscal Years 1993 and 1994 -- Health Care Financing Administration Projects." The Medicaid drug rebate law directs states to implement prospective drug use review programs for Medicaid patients by Jan. 1, 1993; interim final federal regulations governing the programs were published on Nov. 2 ("The Pink Sheet" Nov. 2, p. 14). The IG report comments that prospective DUR is "already standard practice in many pharmacies" and many pharmacy computer systems have "compatible software"; however, it is "unclear what progress states have made in integrating existing pharmacy systems." In addition, the IG also is continuing its audits of how states collect and report drug utilization data for calculating the Medicaid rebates, the accuracy of manufacturers pricing information, and how states handle disputes with manufacturers. The Inspector General also will make a "nationwide projection of estimated cost savings" to Medicaid if "controls" are put in place for ulcer drugs. The estimate will be based on an eight- state analysis of payments for six ulcer drugs to determine "amounts which exceed the manufacturers' recommended dosages." At least three states, Texas, Oregon, and California, have programs already in place to alert pharmacists and physicians when a patient has been receiving acute doses of ulcer drugs beyond the general recommendation on the labeling and that a switch to maintenance levels should be considered. In the Medicare arena, the IG will continue monitoring payments for Amgen's Epogen (erythropoietin) for anemia in dialysis patients and will assess the impact of revised payment rates for physician-administered drugs provided in the physician's office. About a year ago, HCFA issued a final regulation setting payments for physician-administered drugs at the lesser of the estimated acquisition cost or the national average wholesale price ("The Pink Sheet" Nov. 25, 1991, T&G-12).

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