April 15, 2015
On April 13, 2015, the Inspector General (IG) of the Department of Health and Human Services announced in a letter to Senator Bernard Sanders (I. VT), that it would investigate recent price hikes for generic drugs. Generic drug manufacturers should review pricing practices now and prepare for requests from the IG for pricing information as well as possible Congressional testimony.

The IG investigation was requested in February by Senator Sanders and Representative Elijah Cummings (D. MD), who asserted that their review of data from the Centers for Medicare and Medicaid Services (“CMS”) found that ten percent of generic drugs had doubled in price in a recent year and that half of all generic drugs had increased in cost from 2013-2014. The agency plans to review quarterly average manufacturer prices for the top 200 generic drugs as ranked by Medicaid reimbursement for the 2005-2014 period. The IG review will not cover generic drug prices in the Medicare program, although the possibility of doing so was not ruled out.

This IG investigation is likely to bring additional attention to generic drug prices and may well result in Congressional hearings that explore the issue in detail. Generic drug company executives would almost certainly be “invited” to testify. Generic drug manufacturers should review their pricing practices and posture for the 2005-2014 period and prepare now for the likelihood of having to defend those increases to IG investigators and/or Congressional committees.

To view the full alert, click here.