Medicaid Misclassification Means Millions

January 13, 2017

Recently, Sen. Chuck Grassley (R-IA) wrote to the Centers for Medicare & Medicaid Services (CMS) Acting Administrator Andrew Slavitt requesting information on what actions he had taken to hold Mylan, Purdue Pharma, and AstraZeneca accountable for misclassifying EPIPEN® (epinephrine injection), DILAUDID® (hydromorphone), and PRILOSEC® (omeprazole), respectively, for the purpose of Medicaid Drug Rebate calculations.

Per the letter, 8 out of 75 National Drug Codes (NDCs) manually reviewed in 2009 were incorrectly categorized as non-innovator multiple source drugs instead of innovator drugs in the average manufacturer price (AMP) file. Therefore, states only received a 13% rebate for these products, instead of the 23.1% rebate due for innovators. According to Sen. Amy Klobuchar (D-MN), the EPIPEN misclassification may have cost the state more than $4 million in overpayments in 1 year.

While Mylan entered into an agreement with the government in October 2016 to pay $465 million to settle its EPIPEN issues, similar misclassifications may result in significant fines for other manufacturers. 

Sen. Grassley asked Slavitt to respond to his letter by January 18. Considering Slavitt’s last day as Acting Administrator is January 20, the outcome of Grassley’s letter is uncertain.

Health Policy Weekly is written by Xcenda, a consultancy and business unit of AmerisourceBergen Specialty Group. Visit Xcenda’s online archive to access more health policy news.

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