[Congressional Record Volume 164, Number 193 (Thursday, December 6, 2018)]
[Senate]
[Pages S7339-S7340]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Right Rebate Act of 2018
Mr. GRASSLEY. Mr. President, today I raise an important issue for my
colleagues that impacts many families in Iowa but also throughout the
country. You hear it everywhere. It is about high prescription drug
costs. I am not going to address that issue across the board, but I am
going to do it in a narrow way for one part of it.
One contributing factor that has played a part in how much money the
government and taxpayers pay for some drugs is a government program
called the Medicaid Drug Rebate Program.
On Tuesday I introduced bipartisan legislation with Senator Wyden of
Oregon. The bill, called the Right Rebate Act of 2018, would close a
loophole in that program that causes the problem I am addressing.
As a condition for participation in the Medicaid Program, drug
companies must pay a rebate--or some people might call it a discount--
to the Federal Government and to the various States for the drugs they
offer. Generally speaking, the rebate dollar amount is less for a
generic drug than for a brand-name drug.
[[Page S7340]]
The rebate program hasn't worked as designed. Some drug companies
have been able to game the system to boost their bottom line, and they
do so at taxpayers' expense. Some drug companies have paid smaller
rebates to the government. When that happens, that means taxpayers are
footing a bigger burden.
One example, in particular, highlights the main issues we aim to
solve with this legislation.
During the Obama administration--it could have been a Republican
administration as well--because of the problems in this program, Iowans
regularly contacted me by phone, email, and at my annual 99 county
meetings about the difficulties they faced paying the rapidly rising
prices of EpiPen. EpiPen is an emergency medicine used to treat severe,
life-threatening allergic reactions. EpiPen is distributed by a company
called Mylan. In 2007 a pack of two EpiPens cost $100. By 2016, the
cost of that two-pack of EpiPens exploded to more than $600. That is a
very substantial price increase. Nobody is going to argue with that.
Many would argue that it is an unjustified price increase, especially
considering the gut punch to taxpayers who foot the lions' share of the
Medicaid bill for families. They happen to be families in need. I
listened to the concerns of my constituents and began an investigation
about how the drug rebate program was working.
In a nutshell, Mylan had classified the EpiPen as a generic drug in
the Medicaid Program, when it should have been classified as a brand
drug. That means Mylan misclassified EpiPen, and CMS let it happen.
Because of this incorrect classification, Mylan paid a much smaller
rebate than it should have. I asked the Health and Human Services
inspector general to look into these classification practices. The
inspector general found that taxpayers may have overpaid for the EpiPen
by as much as $1.3 billion over 10 years because of the incorrect
classification. Eventually, Mylan settled a False Claims Act case with
the Justice Department for $465 million.
Now, don't ask me why the Justice Department didn't go after the
other probably $700 million. I don't know, and I haven't found out why,
but upon learning of that settlement, I expressed my disappointment
that it didn't seem that taxpayers had been made whole. That is quite
obvious, right?
We shouldn't have had to depend on lawyers and lawsuits to get the
taxpayers' money back. This deception should never have happened in the
first place. That is common sense. Government Agencies should have, as
an initial matter, been responsibly overseeing the programs they are in
charge of.
Because of insufficient attention to the problem by the Center for
Medicare and Medicaid Services--or CMS, as I have been using--Mylan
escaped accountability for a long period of time, costing taxpayers
hundreds of millions--eventually billions--of dollars.
But it is not just Mylan, and it is not just EpiPen. In a December
2017 report, the inspector general found that 885 drugs may have been
potentially misclassified. Specifically, the inspector general found
that, from 2012 to 2016, Medicaid may have lost $1.30 billion in
rebates for 10 potentially misclassified drugs with the highest total
reimbursement.
So where do we go from here? It is clear that the law must change to
provide clarity. So let's establish clear lines of authority to hold
the government bureaucracy and also the private sector accountable.
Taxpayers demand and deserve accountability. Simply said,
accountability will bring cost savings.
The Right Rebate Act, which Senator Wyden and I introduced, will shut
down this loophole used by drug companies. This legislation will
prevent the misclassification of drugs in the first place and protect
taxpayer dollars. It does this by requiring CMS to enforce penalties on
drug companies that knowingly misclassify drugs in the Medicaid
Program.
The legislation also provides remedies for States that are
shortchanged by drug companies. It requires an annual report to
Congress by CMS to make sure the Agency is doing all it can to protect
taxpayer dollars and to keep drug expenditures down.
This is commonsense legislation. It would close a loophole used by
drug companies to keep prices artificially high--much higher than they
should be--and it grants the Secretary of HHS the authority to properly
enforce the law.
The Right Rebate Act is only one step in the fight against high
prescription drug costs, but it is the right step, and there are a lot
of other steps that must be taken. I look forward to working with
Senator Wyden in the 116th Congress on many issues important to
Americans, including the high cost of prescription drugs.
I yield the floor.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. CASEY. Mr. President, I ask unanimous consent to speak as in
morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.