The Federal-state Medicaid program wastes $200 million a year on prescription drugs that the U.S. government or medical authorities classify as ineffective or therapeutically inferior, a consumer health advocate charged yesterday.
"Government expenditures on drugs which the government itself considers ineffective defy and rational explanation," said Dr. Sidney Wolfe, the director of the Health Research Group, a Ralph Nader Organization. He labeled such expenditures "a government welfare program for the drug industry."
In a letter to Secretary of Health, Education and Welfare Joseph A. Califano Jr., Wolfe called on HEW to notify the states that it would no longer reimburse then for Medicaid outlays on such drugs.
Under Medicaid, the states pay for medical treatment, hospital and nursing care and prescription drugs for low-income persons. The U.S. government reimburse the states for 50 to 83 percent of the costs. Wolfe estimated that combined federal-state Medicaid outlays for drugs total $1 billion a year.
A spokesman for Califano said the secretary is studying Wolfe's letter but already had the issue under review and expects to "act on it promptly."
Wolfe said that as long ago as 1970, then-Surgeon General Jesse Steinfeld enunciated a policy of not allowing and HEW funds to go for drugs "classified as 'ineffective' or 'possibly effective' by the Food and Drug Administration," but it has never been implemented for Medicaid.
Wolfe said the General Accounting Office urged such a policy on Feb. 15, 1974. FDA Commissioner Donald Kenedy, Wolfe said, sent a memo to the surgeon general last July 13 urging such a policy.
Wolfe's estimate of the loss to Medicaid on the drugs was based on surveys of the State programs by HRG and on a previously undisclosed 1978 study, funded by the FDA and done at Ohio State University by Drs. T. Donald Rucker and James A. Visconti.
The ohio State study examined the drugs allowable for reimbursement in 12 different state Medicaid programs. It concluded that 30 percent of the drugs being used are "inferior" and Wolfe said this suggests that "over $300 million a year may be squandered by Medicaid" on such drugs.
Both studies used vairous measures of which drugs may be classified as ineffective or less-than-effective and inferior.