HHS Finds 885 Drugs Misclassified Under Medicaid, $1.3 Billion in Missing Rebates

An HHS audit of the Medicaid drug rebate program found hundreds of misclassifications by manufacturers — which may have led to more than $1.3 billion in lost rebates payable to the federal government over the past five years.

The department’s inspector general’s office found 885 misclassified drugs, or about 3 percent of the over 30,000 products in the program. The $1.3 billion figure came from the top 10 drugs alone, ranked by highest reimbursement.

Four manufacturers were associated with more than half of the potential misclassifications, although the names of companies and products were not disclosed in the report.

Investigators compared CMS classification data to FDA files. Whether a product is considered an innovator, single-source or generic product is used to calculate Medicaid rebates, with innovators generally subject to higher amounts. About 95 percent of drugs were appropriately classified, accounting for $58.7 billion in Medicaid reimbursements.