For the third time this month, a US senator is harshly criticizing a deal that Mylan Pharmaceuticals reached with the US Department of Justice for shortchanging Medicaid over rebates for its EpiPen device, which sparked national outrage after a series of price hikes.
In an Oct. 21 letter, Elizabeth Warren (D-Mass.) complained to US Attorney General Loretta Lynch that the $465 million settlement “fails to hold Mylan accountable” and is “shockingly soft on this corporate wrongdoer,” because Mylan did not admit any wrongdoing, none of its executives were penalized, and the company can deduct the payment from its corporate taxes.
She also described the settlement as “shamefully weak” and argued the feds are sending the wrong message because the deal lacks “deterrent value.” The “limp response to Mylan’s deliberate fraud raises a serious question about exactly how you plan to police other companies if you approve settlements that show that crime does pay,” she concluded.
The settlement was issued amid controversy over charges that Mylan improperly classified its EpiPen allergy device in reports to the Medicaid Drug Rebate Program. Under this program, companies must accurately report — and pay — a rebate on drugs paid for by the agency. The medicine is a generic, although the device that delivers the treatment is actually a brand-name, patented product.
Mylan, however, had been reporting EpiPen as a generic product for nearly a decade. This is an important distinction, because classifications are used to determine the size of rebates that companies pay Medicaid. Rebates, which companies pay in exchange for having their products covered, are lower for generics — 13 percent versus 23 percent for a brand-name product.
As a result, from 2011 to 2015, Medicaid paid $797 million on EpiPen, after rebates and dispensing fees. But the Centers for Medicare and Medicaid Services said that Mylan overcharged the federal program for its EpiPen device for years, even though the company had been told repeatedly that it should have provided bigger rebates.
Warren also wrote in her letter that her staff estimates that, as a result of the miscalculation, Mylan apparently underpaid Medicaid rebates by an estimated $530 million — primarily due to the failure to pay the required inflation rebate. Under the rebate program, companies with brand-name products must pay an additional rebate if prices rise at a rate faster than inflation.
And so, Warren wants the Justice Department to hold a meeting by Oct. 28 to brief her staff on the thinking behind the settlement. The Justice Department, so far, has not independently released any of the details concerning the agreement, which Mylan disclosed on Oct. 7. The announcement provided little information beyond saying that the deal resolved all claims regarding rebates.
[UPDATE: A Justice Department spokeswoman declined to comment.]
Similarly, two other senators — Richard Blumenthal (D-Conn.) and Chuck Grassley (R-Iowa) — also wrote letters this month to Lynch to criticize the settlement and ask for further information about the Justice Department decision to accept the settlement terms and for failing to disclose additional details. “The people and the states need to be assured that the $465 million settlement will make them whole,” Grassley wrote in his Oct. 11 letter.
“This proposed agreement is a shadow of what it should be — lacking real accountability for Mylan’s apparent lawbreaking. It short-circuits an investigation and [the] fact-finding necessary to determine the scope of illegality, culpability of individuals, and proof of criminal wrongdoing. Simply, this agreement is blatantly inadequate,” Blumenthal wrote in his own letter on Oct. 14.
Meanwhile, there is “slight concern Mylan may have been too quick to announce” the deal, according to an investor note written last week by Sanford Bernstein analyst Ronny Gal, citing a report in Inside Health Policy that there is no executed settlement agreement. “This could be just keeping a stiff upper lip, but does not do much to make us feel this is a ‘done deal,’” he wrote.
A Mylan spokeswoman noted the Oct. 7 statement said that “Mylan will continue to work with the government to finalize the settlement.”
The Boston Globe should just change its name to ‘The Warren Report.’
The Globe is operating more and more like a campaign office than a real newspaper.
Thanks for your note. To clarify, I run the Pharmalot blog at STAT, which is a separate news entity that is also owned by Boston Globe Media Partners. This explains why the story is flagged on the Globe web site.
That said, I have nothing to do with how the Globe directs its coverage of Warren or any other topic. As an aside, I’ve mentioned Warren only one other time in my posts (or stories) since STAT launched nearly a year ago.
In any event, I chose to run this item because Warren is now the third US Senator to raise an issue with the settlement and also offered her own estimate for the amount by which Medicaid rebates may have underpaid.
So this is it. Something appalling happens and the wrongdoer sits across from Elizabeth Warren for a short time and that absolutely nothing results. Who would not take the milions then? Complete farce and she’s part of the game
This settlement is exactly why companies like Mylan legally bribe Congress and provide a revolving door between government and industry (smirking Billy Tauzin remains the poster boy for this). Remember, most of Congress is working for corporate paymaster, not for us. Elizabeth Warren stands out because she is such an articulate, fearless exception.
Warren is the darling of the Dems and could have had any job in the federal government she wanted under Obama, where she could have actually DONE something about all the abuses she complains about. Yet she chose to be a back bencher from a northeastern state in a a Republican held senate. Curious.
What she wanted to be was the head of the Customer Protection Agency but the GOP blocked her nomination. Remember?
Fact #1: Lynch will be reporting to Hillary in 89 days as part of her “airplane favor” to Bill.
Fact #2: Hillary is in deep for Corporate America.
Fact #3: If Lynch prosecutes Mylan Hillary can X out any donors from Mylan when she runs in 2020.
Fact #4: The only cases that hold interest for Lynch are those involving civil rights violations against certain groups. White collar crime doesn’t interest her.
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