House passes bill to keep drug companies from overcharging Medicaid

The House approved a proposal Tuesday cracking down on the tactics drug companies use to charge Medicaid.

The bipartisan bill, from Sens. Chuck GrassleyCharles (Chuck) Ernest GrassleyCongress should stop tariff power grab, bring balance to U.S. trade policy Graham angers Dems by digging into Clinton, Obama controversies Grassley to test GOP on lowering drug prices MORE (R-Iowa) and Ron WydenRonald (Ron) Lee WydenCongress should elevate those trapped in the gap – support ELEVATE Act IRS shutdown plan fails to quell worries IRS waiving penalty for some in first filing season under Trump's tax law MORE (D-Ore.), comes after the Department of Health and Human Services last year accused Mylan, the maker of EpiPen, of overcharging the Medicaid program by as much as $1.27 billion over ten years by misclassifying the drug as a generic.

The Grassley and Wyden bill would give the Department of Health and Human Services new authority to reclassify a drug and recoup rebates when a manufacturer deliberately misclassifies a drug in order to pay lower rebates. 

The federal government does not currently have the authority to do that. 

Myland paid a $465 million settlement in 2017 for misclassifying the EpiPen.

When introducing the bill last week, Wyden and Grassley specifically cited Mylan and the EpiPen. 

“Misclassifying brand-name drugs as generics under the Medicaid Drug Rebate Program is little more than a dishonest way for drug manufacturers and distributors to game the system and cheat American taxpayers out of their hard-earned money," Grassley said in a statement Tuesday. 

The bill was included as a payfor in the ACE Kids Act, a bipartisan bill aimed at improving care for children with complex medical needs. The CBO estimates that bill will cost $63 million over 10 years, with the rebates bill saving the government $52 million in the same time frame.

Grassley will be the Senate Finance Committee's chairman next year, giving him a larger platform to go after drug companies, while Wyden will continue to be the ranking member.