State Exits Medicare Drug Suit

California authorities said Thursday that they would drop out of a multi-state lawsuit over a new federal prescription drug program after the Bush administration revised a reimbursement formula that would have cost the state $131 million.

Under the revised formula for how much states must reimburse in savings to the federal government, California will save $357 million this year and $206 million next year, California Atty. Gen. Bill Lockyer said in a statement.

“As long as we’re satisfied the savings are real and significant, we will refrain from going to court on the issue,” he said.

Lockyer had said Feb. 1 that he would join the lawsuit against the U.S. over the so-called clawback provision of the prescription drug program because the administration had overstated how much the state would save. Under the program, the federal government, through private-sector health plans, provides prescription drugs to poor and disabled seniors.

California will seek reimbursement from the federal government for $150 million in emergency funding it set aside to buy prescription drugs for seniors who weren’t able to get their medicine under the plan, which went into effect Jan. 1, because of implementation problems.