The OIG recently issued a report evaluating the accuracy of pharmaceutical manufacturer-reported Medicaid drug rebate program data, including pricing information and FDA classification (e.g., innovator/brand or noninnovator/generic). The OIG determined that the “vast majority” of the drugs in the Medicaid rebate program were classified appropriately in 2016, but about 3% of these drugs (885 drugs) may have been misclassified.  The OIG estimates that from 2012 to 2016, Medicaid may have lost $1.3 billion in rebates for 10 potentially-misclassified drugs with the highest total reimbursement in 2016.

In light of these findings, the OIG recommended that CMS: (1) follow up with identified manufacturers to determine whether current classifications are correct; (2) improve the CMS Drug Data Reporting for Medicaid System; and (3) pursue a means to compel manufacturers to correct inaccurate classification data reported to the Medicaid rebate program (either through new legislative authority or a determination that CMS has the authority to suspend potentially-misclassified drugs from Medicaid rebate program participation until the manufacturer corrects all inaccurate information).  CMS concurred with the OIG’s recommendations.  With regard to the third recommendation, CMS pointed out that it shares oversight responsibility with the OIG, and CMS “encourages OIG to use its enforcement authority to compel manufacturers to correct inaccurate drug classification data reported to the Medicaid drug rebate program.”  The OIG responded that while it will continue to pursue penalties against manufacturers where appropriate, it “believes it lacks legal authority to affirmatively pursue penalties for the submission of inaccurate drug classification data.”