High Court Rejects Vanda Suit Over Medicaid Drug Definition

The US Supreme Court declined Monday to take up a challenge from Vanda Pharmaceuticals Inc. over what constitutes a “line extension” drug under the federal government’s Medicaid Drug Rebate Program.

Drug manufacturers under the program must pay the government additional Medicaid rebates if their drug prices exceed the rate of inflation.

Drugmakers have found ways to avoid the additional inflation penalty by creating line extensions, or slightly altering an existing drug to create a new drug that would ultimately affect the manufacturer’s rebate amount.

To curtail that practice, Congress created an alternative unit rebate amount calculation to apply to certain ...