T

he pharmaceutical company Mylan offered rebates to at least six state Medicaid programs on the condition that the states would make it harder for Medicaid patients to obtain products that compete with its EpiPen auto-injector, according to email correspondence obtained by STAT.

The rebates Mylan offered to state Medicaid programs were conditional upon them making EpiPen easily available while competitor products would require special requests by clinicians in order for them to be covered.

Such arrangements are common in the pharmaceutical industry, experts say, and are themselves legal. But some lawyers say that companies engaging in this “exclusive dealing” who also hold a large market share may be vulnerable to antitrust litigation.

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The drug maker Sanofi, which previously marketed a competing epinephrine auto-injector, filed suit against Mylan in April, alleging that it violated antitrust law by, among other things, signing exclusive contracts to cement its dominant position in the market. Legal experts say that the documents obtained by STAT might be relevant for Sanofi’s case.

“Mylan believes the claims in Sanofi’s lawsuit are without merit and intends to defend against them vigorously,” said Mylan spokesperson Julie Knell, who declined to answer specific questions because of the ongoing litigation. She said that EpiPen “competed actively” with Sanofi’s product, whose “list prices were repeatedly higher than the list prices of EpiPen devices.”

In the midst of Mylan’s many imbroglios — including raising the price of EpiPen by over 450 percent since 2004, congressional inquiries, disgruntled shareholders, and an investigation by the New York state attorney general — this allegation has largely flown under the radar.

Getting preferred placement

In response to a recent public records request, STAT obtained emails addressed to employees at the Nebraska Department of Health and Human Services that describe the condition under which certain states could receive a discount on the price: make it easier for Medicaid patients to access EpiPens, and harder for them to access competing products.

In one email, dated Oct. 29, 2015, an employee of Magellan Health, which helps the state negotiate drug prices for Medicaid patients, wrote to a Nebraska state employee that the EpiPen rebate offers available to Nebraska and other states “provide enhanced savings for making EpiPen the exclusive epinephrine delivery systems [sic] on the [preferred drug list].”

According to the email, that rebate offer was available to states participating in two Medicaid “purchasing pools” administered by Magellan or its affiliates — the National Medicaid Pooling Initiative (NMPI) and The Optimal PDL $olution (TOP$) — as well as some other states that work with Magellan.

STAT confirmed that at least five other states — Idaho, Maryland, Minnesota, North Carolina, and Wisconsin — were members of these purchasing pools when the email was sent.

STAT is unaware of how many states accepted Mylan’s offer and whether the offer still stands.

In another email sent from a Magellan employee, dated Sept. 19, 2013, an attached document states that the “Epipen Offer requires it to be the only preferred product in the class so that neither epinephrine generic nor Auvi-Q can be preferred.” That email does not specify which states could make use of the rebate.

“These emails do offer some substantiation to Sanofi’s claims in the complaint that part of Mylan’s monopolization strategy for EpiPen was exclusive dealing,” said Elizabeth McCuskey, a health law professor at the University of Toledo College of Law.

Discounts and the law

State Medicaid programs that cover prescription drugs have to pay for everything that’s approved by the Food and Drug Administration — but states can establish “preferred drug lists” to encourage doctors to prescribe some drugs over others. If a drug is not “preferred,” doctors need to obtain prior approval from the Medicaid program in order for the drug to be covered.

It’s standard practice for pharmaceutical companies to cut the cost of their drugs in exchange for placement in the “preferred” category. Sometimes, the discount will only apply if that product is the sole drug for its condition on the “preferred” side of the list. Other times, the discount may depend on how many drugs are listed as “preferred.” The discount amounts are secret, protected by federal law.

Michael Carrier, a professor at Rutgers Law School who specialties in antitrust law in the pharmaceutical industry, said that courts, when determining if an exclusive contract violates the law, typically consider the company’s market share.

According to data that the Nebraska Department of Health and Human Services provided as part of a public records request, the EpiPen and EpiPen Jr comprised 99.7 percent of prescriptions for epinephrine auto-injectors in the state’s Medicaid program between May 1, 2015, and July 31, 2015.

But courts also consider other factors, Carrier said, such as whether or not such exclusive contracts are considered business as usual in the industry. Since other pharmaceutical companies also offer lower prices to states under similar conditions, the situation might look a little better for Mylan, he said.

This isn’t the first time Mylan has come under scrutiny for entering into exclusive agreements. Last summer STAT reported that Mylan’s practice of selling EpiPens to schools at deep discounts, provided that the schools signed a form saying they would not purchase competing products, may violate antitrust law. The New York attorney general is investigating this program.

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