Medicare bill aims to block drugmakers from misclassifying drugs

A bipartisan bill introduced Tuesday by members of the Senate Finance Committee would prevent drugmakers from profiting by misclassifying drugs to Medicare as generics.

The bill is in response to a lawsuit against Mylan N.V. (NASDAQ:MYL) for misclassifying its EpiPen as a generic in order to shrink its required Medicaid rebate. The company settled the suit in 2016 with an agreement to pay the government $465 million (see "Mylan Inflammation News").

In a statement, Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), co-sponsors of the bill, said one analysis by the U.S. Department of Health and Human Services (HHS) Office of Inspector General suggested Mylan repaid a fraction of what it saved, as it potentially overcharged the government as much as $1.27 billion over 10 years. A second analysis identified 885 additional drugs that may have been misclassified.

If passed, the new legislation would close the loophole and allow HHS to impose penalties and recover rebate payments.

Wyden said in the statement he was hopeful the legislation, named the Right Rebate Act of 2018, would become law by year end.