RICHMOND, Va. — After a report released last year showed the Virginia Medicaid agency was significantly overspending on drugs, an audit has confirmed the report was based on flawed data. Still, an advocacy group says even the updated data is raising questions about whether the commonwealth is maximizing its ability to reduce the cost of drugs as the state lags behind most others in retaining discounts.
"If you're a taxpayer ... remember, you have a vested interest in this. It's your money," said Monique Whitney of Pharmacists United for Truth and Transparency.
Her organization, which advocates for reform of the pharmacy benefit manager industry, endorsed a 2025 report that found, according to publicly available data, Virginia Medicaid outspent all other states on prescription drugs and collected the smallest fraction of rebates from drug manufacturers. The rebates are supposed to help bring costs down.
But an external audit completed in January 2026, obtained by CBS 6 through a public records request, showed the report's findings relied on inaccurate data. According to the audit, the Department of Medical Assistance Services (DMAS), which manages the state's Medicaid program, filed inflated drug payment information in the federal government's public database. The audit did not say how long the issue had been occurring, but a letter written last year by former Health and Human Resources Secretary Janet Kelly said the issue dated back to 2019.
Auditors said the cause of the inaccurate data was largely due to DMAS submitting the full amounts of outpatient hospital claims instead of only the portion of the claims attributable to drugs. That inflated the spending numbers.
According to the audit, the data reporting process also includes a review by DMAS' pharmacy benefit management solutions vendor, Prime Therapeutics.
A DMAS spokesperson told CBS 6 this was strictly a reporting error that did not impact rebate collection or actual payments to providers. The agency added it has taken steps to improve its data quality in an effort to increase drug pricing transparency.
The audit recommended DMAS perform oversight of its pharmacy benefit management solutions vendor to "ensure that rebates are properly processed and invoiced."
But there's a question the audit didn't answer: What were the real spending and rebate numbers?
DMAS has not definitively said whether it will go back and correct the old data, and the audit suggested there may not be a regulatory requirement for the agency to do so.
However, a DMAS spokesperson confirmed Virginia's percentage of Medicaid drug spending returned in the form of rebates was 42% in the first quarter of 2025. Whitney said that number is still "very low."
“What that means is that there is likely additional rebate money that could be available to the Commonwealth to help keep health care costs down," Whitney said.
While not an apples-to-apples comparison due to differences in reporting years, Virginia's 2025 rebate percentage is well below the 2023 rebate percentages of surrounding states, according to a federal database:
- Virginia: 42% (FY25)
- Maryland: 50.5% (FY23)
- West Virginia: 69.1% (FY23)
- Kentucky: 94.4% (FY23)
- Tennessee: 68.2% (FY23)
- North Carolina: 62.1% (FY23)
The commonwealth's number also lags behind the 2023 spending-weighted national rebate average of 51%, according to a federal database.
According to DMAS' audit, “a higher calculation of rebates as a percentage of Medicaid payments is generally viewed as a measure of success.”
“It turns out that the Commonwealth is still spending predictably too much money on its prescriptions. It's probably not still taking advantage of the opportunity for better rebates. It's still going to cost the people of Virginia more money," Whitney said.
Whitney added this should serve as an opportunity for Virginia to take a harder look at its contract terms, especially as the state embarks on contracting with one pharmacy benefit manager in response to recent legislation.
CBS 6 sent follow-up questions to DMAS about its rebate percentage and drug spending, as well as an interview request, but we have not heard back. In an initial statement, the agency said its rebate collection processes were "functionally sound and effective."
CBS 6 also requested comment from Prime Therapeutics, but a spokesperson referred questions back to DMAS.
CBS 6 is committed to sharing community voices on this important topic. Email your thoughts to the CBS 6 Newsroom.
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