Medicaid Drug Proposal Sets Up Likely Constitutional Challenge

Provisions in a proposed HHS policy aimed at driving down drug costs to the Medicaid program overstep the agency’s authority and are likely to face a constitutional challenge, attorneys say.

The proposed rule (RIN: 0938-AU28), issued in May, aims to prevent the misclassification of drugs, particularly when brand-name drugs are inaccurately labeled as generic, which can result in lower rebate payments for states.

Lawyers representing drugmakers say the proposal would rewrite the rules of engagement for drug companies looking to do business with the Medicaid Drug Rebate Program, a partnership that allows drug makers access to the nation’s 94 ...