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Press Release
Apr 12, 2004 - 01:00 AM


CONTACT: Jerry Flanagan - 415-633-1320

"Collectinator" Called On to Release Records Of $1.34 Billion in Uncollected Drug Rebates

FTCR submitted a Public Records Act Request for all state documents pertaining to the drug rebate program
Governor Schwarzenegger, who promised to weed out waste and corruption in Sacramento as a candidate, was challenged today to produce records of up to $1.34 billion in uncollected prescription drug rebates from pharmaceutical companies. The Foundation for Taxpayer and Consumer Rights (FTCR) submitted a Public Records Act Request for all state documents pertaining to the drug rebate program (see request below).

In December, a federal audit by the Office of Inspector General at the Department of Health and Human Services found that California could not account for $1.34 billion in rebates that the state had reported to federal regulators. Pharmaceutical companies are required under a 1990 federal law to pay rebates to the state's MediCal program which bulk purchases health coverage and prescription drugs for low-income and disabled residents. Since the federal audit was issued, the California Department of Health Services has said that it miscalculated the size of the rebate by $500 million but has yet to justify the discrepancy with federal regulators.

Governor Schwarzenegger's budget proposal has called for $800 million in cuts to state public health programs. Schwarzenegger has received more than $290,000 in documented campaign contributions from pharmaceutical companies.

"It is unacceptable that California, the fifth leading economy in the world, cannot balance its checkbook," said Jerry Flanagan of FTCR. "Governor Schwarzenegger and state regulators have been blasé about hundreds of millions of dollars in unaccounted for funds. Meanwhile, thousands of poor and disabled California residents have been told that the state can no longer afford to pay for their health care coverage. California needs Governor Schwarzenegger to be the collectinator and demand that pharmaceutical companies pay their bills to the state."

Last week, FTCR released and analysis of the 46 state audits and the District of Columbia showing that California had performed "far below average" in tracking and collecting rebates. The FTCR state-by-state analysis is available at: http://www.consumerwatchdog.org/healthcare/rp/Audit_analysis.pdf

The Office of Inspector General audit of the California MediCal program is available at: http://www.consumerwatchdog.org/healthcare/rp/California_MediCal_Audit.pdf

Public Records Act Request:

April 12, 2004

Sandra Shewry
Director
California Department of Health Services
1501 Capitol Avenue, Suite 6001
MS 0000
Sacramento, CA 95814

Re: Public Records Act Request

Dear Director Shewry:

Pursuant to California Government Code 6253(b) of the Public Records Act, The Foundation for Taxpayer and Consumer Rights (FTCR) hereby requests copies of all public records as follows:

1. CMS 64 and CMS 64.9R reports for the quarters ending March 31, 1991 through March 31, 2004 as pertaining to the California MediCal drug rebate program.

2. Any internal DHS audit(s), memos, or written documents pertaining to the collection of MediCal drug rebates and supplemental rebates.

3. A record of all meetings, excluding formally noticed public hearing, pertaining to the collection of rebates between January 1, 2000 and April 9, 2004.

4. All contracts, work orders, and written correspondence between DHS and EDS including invoices, records of posted payments, and records of DHS' subsidiary ledger system pertaining to the California MediCal drug rebate program between January 1997 and the present.

5. All records and correspondence between DHS and pharmaceutical companies pertaining to disputed MediCal drug rebates.

6. All contracts with pharmaceutical companies affecting the payment of rebates, including but not limited to supplemental rebates, under the California MediCal drug rebate program between January 1997 and the present.

7. All claims submitted to pharmaceutical companies for rebates, including but not limited to supplemental rebates, under the California MediCal drug rebate program between January 1997 and the present.

Any public records withheld from production for inspection should be separately identified and should be accompanied by the claimed justification for withholding as provided by Gov. Code 6255, stating the nature of the document withheld, the specific exemption under which the document is being withheld, and the public interest served by withholding said document. We reserve the right to appeal your decision to withhold any materials.

Should you contend that a portion of a particular document is exempt from disclosure due to confidentiality, we also request pursuant to Gov. Code 6253(a) that the exempt portion be redacted and the remaining portion be produced for our inspection.

FTCR is prepared to pay reasonable search and duplication fees in connection with this request. However, agencies have discretion to waive fees in order to provide greater access to public records pursuant to Gov. Code 6253(e). (See North County Parents Organization for Children with Special Needs v. California Dept. of Educ. (1994) 28 Cal.Rptr.2d 359, 361.) As the information which is the subject of this request is of primary benefit to the public to inform how taxpayer dollars are being spent, we ask that you waive all search and duplication fees.

Consistent with 6253(c), we expect to hear from you within ten days. If you have any questions concerning the scope of our Public Records Act request, please contact the undersigned at (415) 633-1320.

Sincerely,

Jerry Flanagan

cc: Barbara Yonemura, Deputy Director & Chief Counsel

-30-

The Foundation for Taxpayer and Consumer Rights is a non-profit and non-partisan consumer advocacy organization. For more information visit us on the web at:
http://www.consumerwatchdog.org




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