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Regulatory Focus™ > News Articles > Not Just Mylan: Misclassifications May Have Cost Medicaid More Than $1B

Not Just Mylan: Misclassifications May Have Cost Medicaid More Than $1B

Posted 20 December 2017 | By Zachary Brennan 

Not Just Mylan: Misclassifications May Have Cost Medicaid  More Than $1B

The US Department of Health and Human Services' (HHS) Office of Inspector General (OIG) released a report this week finding that drugmakers may have caused the Medicaid program to lose out on $1.3 billion for 10 potentially misclassified drugs from 2012 to 2016.

The release of the report follows a settlement between Mylan and the Department of Justice from August in which the drugmaker agreed to pay $465 million to settle claims relating to the misclassification of EpiPen auto-injectors and EpiPen Jr. auto-injectors that meant Mylan may have avoided paying higher rebates. 

OIG Study

For the HHS' OIG study, which was announced last December, manufacturer-reported classifications for drugs in the Medicaid rebate program were compared to drug information from the US Food and Drug Administration (FDA).

The OIG said it found the "vast majority [98%] of the approximately 30,000 drugs in the Medicaid rebate program were classified appropriately," though manufacturers may have misclassified 885 of these drugs (3%) in 2016, and the OIG report found that for more than 600 other drugs, there was either missing info in FDA files or OIG was unable to determine the classification.

In addition, there was no Medicaid reimbursement for 266 of the 885 potentially misclassified drugs in 2016.

And for the 10 potentially misclassified drugs with the highest total reimbursement in 2016, the report says that from 2012 to 2016, Medicaid may have lost $1.3 billion in base and inflation adjusted rebates.

The report did not name names, but found that potential misclassifications were associated with 54 different manufacturers in 2016. However, just four companies were responsible for 54% of the potential misclassifications.

OIG said it recommends that the Centers for Medicare and Medicaid Services (CMS) (1) follow up with manufacturers associated with potentially misclassified drugs identified in the report to determine whether current classifications are correct, (2) improve its Drug Data Reporting for Medicaid System to minimize inconsistent data and track potential classification errors and (3) pursue a means to compel manufacturers to correct inaccurate classifications. CMS concurred with the recommendations.


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