Executive Calendar

Floor Speech

BREAK IN TRANSCRIPT

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.

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.

BREAK IN TRANSCRIPT

Source