Chuck Grassley

United States Senator from Iowa

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Wyden, Grassley Introduce Legislation to Fix Prescription Drug Misclassification

Dec 04, 2018

WASHINGTON – Sens. Ron Wyden of Oregon and Chuck Grassley of Iowa introduced the Right Rebate Act of 2018, which would close a loophole in Medicaid that has allowed pharmaceutical manufacturers to misclassify their drugs and overcharge taxpayers by billions of dollars and provide HHS with additional authorities to ensure drugs are properly classified.

“Misclassification of prescription drugs hurts millions of Americans whose lives depend on those medications, such as EpiPen, but can’t afford them due to unnecessarily exorbitant pricing,” Grassley said. “This legislation is a significant step forward to fixing the problems in our health care system that have allowed pharmaceutical manufacturers to price gouge taxpayers and consumers for too long.”

The Right Rebate Act of 2018 would give the Secretary of Health and Human Services more authorities and tools to monitor drug manufacturers who participate in the Medicaid Drug Rebate Program (MDRP) and would allow the Secretary to require drug manufacturers to reclassify their drugs and impose civil monetary penalties when drugs are knowingly misclassified.

With the introduction of this bill, Grassley has introduced legislation with every Democratic Member of the Senate Finance Committee during the 115th Congress. Grassley recently announced he would opt to serve as chairman of the Senate Finance Committee in the 116th Congress.

Grassley is a longtime advocate for lower prescription drug prices and has been a vocal critic of EpiPen’s exorbitantly high cost.

During the Obama administration, Iowans regularly contacted Grassley by phone, email and at his annual 99 county meetings about the difficulties they faced paying for the anti-allergy EpiPen device. After conducting oversight of the issue, Grassley learned that Mylan, EpiPen’s distributor, classified its popular anti-allergy medicine as a generic instead of as a brand name product in the MDRP. That incorrect classification allowed Mylan to pay smaller rebates to States and government programs, such as the MDRP. Grassley’s investigation also found that HHS and the HHS Inspector General did not have adequate authorities to properly oversee the MDRP and ensure drugs were properly classified. The costly practices were confirmed by the HHS Inspector General when it found, at Grassley’s request that taxpayers may have overpaid for the EpiPen by as much as $1.27 billion over 10 years.  The Inspector General also found that additional drugs could be misclassified.   

Grassley continually pressed for the accurate classification of prescription drugs under the MDRP. He sought answers from CMS on whether it sought to recoup tax dollars overpaid for EpiPens from Mylan. He sent a follow-up letter after receiving no response from CMS, reiterating his initial request for information.

Grassley continued pressing for answers when news broke that EpiPen maker Mylan was in discussions with the Department of Justice (DOJ) to settle a False Claims Act case and repay the taxpayers for over-charging for EpiPen. Grassley sent a letter to then-President-elect Trump urging appropriate classification under the Medicaid Drug Rebate Program. That letter is available here. Grassley also sent a letter to the outgoing administration on the issue, which is available here. His Oct. 3 letter to the prior administration on the EpiPen misclassification is available here. When the DOJ and EpiPen maker Mylan settled its case over the drug’s misclassification, Grassley issued a statement of disappointment, saying it shortchanged taxpayers.

On behalf of Iowans, Grassley also wrote to Iowa Attorney General Tom Miller seeking clarification regarding his office’s ability to determine the value of reimbursement to the state necessary to make Iowa whole from EpiPen’s apparent misclassification. A few months later, Grassley followed up with another letter seeking additional details and accompanying documentation regarding the state’s receiving $1.5 million as part of a DOJ settlement with Mylan.

In August of 2018, the U.S. Food and Drug Administration (FDA) approved the first generic version of the EpiPen. Grassley praised the move, saying that it was “great news for millions of Americans who depend on life-saving, anti-allergy devices.” Grassley believes getting more generics approved is one of the most important market-based strategies for lowering drug prices overall.

A one page summary of the bill can be found here.

The full legislative text of the bill can be found here.

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