Bipartisan, Bicameral Health Committee Leaders Push CMS on Stronger Oversight of the Medicaid Drug Rebate Program

WASHINGTON – Bipartisan leaders and key members of the Senate Finance Committee and House Energy and Commerce Committee sent a letter to the Centers for Medicare & Medicaid Services (CMS) regarding its oversight of the Medicaid drug rebate program.

The leaders explained, “We are troubled that misclassifications of prescription drugs for purposes of the Medicaid drug rebate may have resulted in federal and state Medicaid expenditures for certain drugs that were higher than would otherwise be warranted.”

The bipartisan, bicameral leaders continued, “Under current law, prescription drug manufacturers are required to enter into rebate agreements with the Secretary of the Department of Health and Human Services (HHS) and pay quarterly rebates to the States. … Accurate classification of prescription drugs is critical, as federal law determines the Medicaid rebate amount based on a drug’s classification.”

Specifically mentioned in the letter was a report issued last month, requested by both committees, by the Department of Health and Human Services (HHS) Office of the Inspector General (OIG). The report reviewed CMS’s oversight and operation of the Medicaid drug rebate program. The report compared classifications of drugs in the program to those in the Food and Drug Administration.

“OIG detailed that for the period reviewed, Medicaid may have lost $1.3 billion in base and inflation-adjusted rebates for just these 10 drugs,” the leaders wrote to CMS. “Even more troubling, CMS does not track misclassification errors, so it is unclear what steps CMS has taken to address these errors. Moreover, OIG reported that CMS does not have explicit legislative authority to correct misclassification errors.”

Concerned about possible longstanding weaknesses in the agency’s oversight of their drug classifications, the leaders posed a number of questions to CMS.

The letter was signed by:

Senate Finance Committee Chairman Orrin Hatch (R-UT)

Senate Finance Committee Ranking Member Ron Wyden (D-OR)

Senator Charles Grassley (R-IA)

Senator Claire McCaskill (D-MO)

Energy and Commerce Committee Chairman Greg Walden (R-OR)

Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ)

Health Subcommittee Chairman Michael C. Burgess, M.D. (R-TX)

Health Subcommittee Ranking Member Gene Green (D-TX)

Oversight and Investigations Subcommittee Chairman Gregg Harper (R-MS)

Oversight and Investigations Subcommittee Ranking Member Diana DeGette (D-CO)

Click here to read a copy of the letter.

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