Medicaid misclassification bill inspired by EpiPen snafu passes Congress

How long does it take Congress to reach an agreement on drug prices? On the topic of drug misclassifications in Medicaid, about two and a half years. 

That’s the time that’s passed since Mylan’s famous EpiPen saga and the Justice Department settlement that followed. Finally, lawmakers have passed the Right Rebate Act, hoping to crack down on drug misclassifications that lower drugmaker rebates and cost taxpayers. And now the bill is headed to the president's desk.  

The legislation allows the Department of Health and Human Services to closely monitor the Medicaid Drug Rebate Program for misclassifications and requires regular reports to make sure it keeps an eye out. Under the bill, the HHS secretary could require drug companies to reclassify medications and impose penalties for drugs that are "knowingly misclassified." 

Industry watchers may remember Mylan’s EpiPen settlement for $465 million. Years of price hikes sparked intense scrutiny on the product, and in 2016, the Centers for Medicare & Medicaid Services said the company had misclassified the drug as a generic. The drug should have been in the innovative drug class, and its misclassification allowed Mylan to pay lower rebates to the government-funded program. Mylan quickly moved to settle for $465 million in October 2016. 

As the government and Mylan pushed for a settlement, lawmakers and others pushed back. An HHS investigation found the misclassification cost taxpayers $1.27 billion. Sen. Charles Grassley, who last year introduced the Right Rebate Act along with Sen. Ron Wyden, responded at the time that the "settlement amount shortchanges the taxpayers." Still, Mylan and the government finished the deal in August 2017. 

While the legislation is far from the only drug-pricing measure under consideration, Sen. Wyden celebrated it as a solid start. He said the bill is a "meaningful step towards preventing drug manufacturers from illegally enriching themselves off taxpayer dollars."  

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