On Friday February 17, 2017, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued an Online Portfolio on Drug Pricing and Reimbursement, pulling together OIG’s body of work related to drug pricing and reimbursement in HHS programs, including Medicaid and Medicare, since 2010.
According to its overview of the portfolio, OIG has “a long history” of assessing prescription drug reimbursement policies, including a “prominent role” in highlighting vulnerabilities in Medicare Part B:
OIG’s reports and enforcement work helped pave the way for legislative changes in the reimbursement methodology for most drugs under Medicare Part B and the resulting programmatic changes that saved the Federal Government Billions of Dollars.
Interestingly, the portfolio itself not only highlights OIG’s work that resulted in programmatic changes, it also highlights OIG’s work that has yet to result in any action.
The OIG portfolio contains five substantive sections: Reports, Impact, Recommendations, Enforcement, and Guidance.
The Reports section lists 48 completed OIG evaluation or audit reports involving manufacturer-reporting pricing data, Medicare price calculations, and spending, Medicaid drug spending and rebates, and the operations of the 340B Drug Discount Program. The listing of the reports is not chronological, and the first report listed is the OIG’s 2009 report on the Accuracy of Drug Categorizations for Medicaid Rebates. As we have recently blogged, this report is at the heart of Senator Grassley’s continued questioning of what CMS did/did not do after it received the report highlighting that a number of drugs, including the EpiPen, are classified as brand by FDA but as generic by CMS – a situation that potentially cost states hundreds of millions of dollars in Medicaid drug rebates.
The Impact section lists nine specific OIG recommendations that have been implemented by CMS or through Congressional action, linking to the OIG Report that made the recommendation and the vehicle for implementation. Examples include OIG’s recommendation on Medicaid reimbursement methodologies based on Actual Acquisition Cost, implemented in CMS’ 2016 Medicaid Covered Outpatient Drugs Final Rule, and recommendation on Medicare reimbursement of infused drugs using an ASP-based methodology, implemented through the 21st Century Cures Act.
The Recommendations section lists ten specific OIG recommendations that have yet to be implemented, including recommendations specific to Medicare drug rebates, legislation to strengthen manufacturer price reporting requirements, and implementation of processes to adequately ensure 340B drugs are not inappropriately subject to Medicaid duplicate discounts.
Interestingly, the Enforcement section does not reference false claims drug pricing cases OIG worked on with other government enforcement entities, such as the Department of Justice or Medicaid Fraud Control Units. Instead, this section is specific to OIG’s own assessment of penalties against drug manufacturers for failure to timely and accurately report pricing data used to assess Medicaid Drug Rebates.
In the Industry Guidance section, OIG highlights several Policy Statements and Bulletins it has issued on certain industry developments and the risk of unlawful kickbacks or unlawful beneficiary inducement, such as the advent of drug manufacturer co-pay coupons, or hospitals that discount/waive Medicare patient co-pays for self-administered out-patient drugs.