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NYS misses out on $183M in drug rebates due to errors

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  • Staff Report 

In a surprising revelation, the state comptroller has discovered that New York failed to collect $183 million in drug rebates over a five-year period. This significant loss of funds highlights the importance of rebate processes and the need for oversight.


The New York State Department of Health (DOH) is responsible for identifying Medicaid claims eligible for rebates and submitting them to Magellan Medicaid Administration, a third-party entity. Subsequently, Magellan forwards the rebate invoices to the drug manufacturers. However, an audit conducted by Comptroller Thomas DiNapoli’s office uncovered numerous errors and overlooked claims, leading to the massive financial shortfall.


One specific error of omission on 490,000 claim forms accounted for $109 million, more than half of the uncollected rebates. Although the comptroller acknowledged that the DOH made significant improvements during the audit period, the $183 million loss remains a concerning issue.

The DOH stated that the unclaimed rebate money represents only a small portion of Medicaid rebates for the audit period. Furthermore, the DOH views the audit process as an opportunity to enhance and strengthen its policies and procedures.