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hree US senators want the US Department of Justice to investigate whether Mylan Pharmaceuticals violated federal law with its classification of its EpiPen device with the Medicaid Drug Rebate Program. Under the program, companies are responsible for accurately reporting and paying a rebate on drugs paid for by Medicaid.

In a letter to US Attorney General Loretta Lynch, the senators contend that Mylan may have violated the False Claims Act by “knowingly” misclassifying EpiPen as a generic instead of a brand-name product. A violation occurs when a company “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay . . . money . . . to the government,” they wrote.

The difference in rebates can add up, which is why the issue has generated increasing attention among lawmakers. If Mylan classified EpiPen incorrectly, Medicaid received a 13 percent rebate that pertains to generic products, instead of the 23.1 percent rebate to which the program is entitled for brand-name medicines. This is a taxpayer issue, because states and the federal government use the rebates from drug makers to offset the cost of covering medicines.

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The letter was sent by Senator Richard Blumenthal (D-Conn.), Senator Chuck Grassley (R-Iowa), and Senator Amy Klobuchar (D-Minn.), who has previously suggested the generic classification cost her state about $4 million in rebates.

Natalia Bronshtein/STAT Source: Elsevier Clinical Solutions’ Gold Standard Drug Database

For its part, Mylan maintains the classification was appropriate and cited a 1997 letter from the Medicaid program that was written to Dey Laboratories, which Mylan purchased in 2007. The letter noted that it was “fitting and proper” to classify EpiPen as a “non-innovator,” or generic drug product. But some lawmakers contend this is inconsistent with the way Medicare Part D views the product.

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EpiPen has become the latest focus of national outrage of drug pricing after Mylan raised the price by 548 percent over the past decade to $608. The constant price hikes have angered families, who keep the device on hand to combat life-threatening allergies, but must often pay most or all of the cost as insurers shift more costs onto patients.

A congressional hearing last week focused on EpiPen pricing and profits, although the letter to the Department of Justice is only the latest effort by lawmakers to urge a federal agency to probe Mylan.

Earlier this month, Senator Ron Wyden (D-Ore.) and Representative Frank Pallone (D-N.J.) asked the US Department of Health and Human Services to investigate whether Mylan owes rebates to Medicaid. And 15 House Republicans asked the HHS Inspector General to investigate whether the Centers for Medicare and Medicaid Services is properly overseeing the Medicaid program and how medicines are classified.

Also earlier this month, Blumenthal and Klobuchar asked the US Federal Trade Commission to investigate whether Mylan violated antitrust laws as a result of a program to market EpiPen to schools. Similarly, US Representative Tammy Duckworth (D-Ill.) asked the Department of Justice to investigate the Mylan schools program, and the New York Attorney General is already conducting a probe into this issue.

Alex Hogan, Hyacinth Epinado/STAT Alex Hogan, Hyacinth Epinado/STAT

The calls for antitrust probes followed a report by STAT that described how Mylan has sold EpiPen to schools at a discounted price, but prohibited schools from buying devices from competitors — a provision that experts say may have violated antitrust law.

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  • “And why did it take so long to notice this disparity?” Sorry – just a rhetorical question … I will bet that Medicare Part D did not require an automatic reclassification of existing generic products. Any takers?

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