n blunt language, West Virginia Attorney General Patrick Morrisey is vowing to reject the settlement between the federal government and Mylan Pharmaceuticals, which was accused of shortchanging Medicaid.
In a letter to US Attorney General Loretta Lynch, he called the $465 million “woefully deficient” compared with the “fraud” perpetrated by the drug maker and urged the Department of Justice not to follow through with the deal.
“The reported settlement is not in the best interest of West Virginia,” he wrote. “It does not nearly pay for the damage done by Mylan and sends the wrong message of leniency to other pharmaceutical companies engaged in the Medicaid market. The people of West Virginia deserve much better than this.” He did not, however, specify how much the state might receive from the settlement.
The missive comes after three senators also criticized the settlement, which was announced on Oct. 7. Just last week, Senator Elizabeth Warren (D-Mass.) called the deal “shamefully weak” because it failed to hold Mylan accountable and allowed the company to deny any wrongdoing. She also complained the settlement lacks “deterrent value.”
The settlement was issued amid controversy over charges that Mylan improperly classified the EpiPen allergy auto-injector 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, epinephrine, 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.
But the Centers for Medicare and Medicaid Services said Mylan overcharged Medicaid for EpiPen for years, even though the company had been told it should have provided bigger rebates. From 2011 to 2015, Medicaid paid $797 million on EpiPen, after rebates and dispensing fees. But an agency official said the federal and state health care program for the poor should have spent less.
The anger over rebates emerged shortly after national outrage was sparked by the cost of the device. Mylan raised the list price by 548 percent, to $608 for a two-pack, over the past decade. The company has argued that a growing share of the rising price was actually absorbed by health plans and pharmacy benefit managers, but consumers with high-deductible insurance have been paying much of the tab.
The Morrisey letter, by the way, also adds a political wrinkle to the EpiPen controversy. Morrisey is a Republican. Mylan chief executive Heather Bresch is the daughter of Senator Joe Manchin, a Democrat who represents West Virginia. Other than issuing a brief statement expressing confidence that Mylan will take appropriate steps, Manchin has avoided making public comments.
Separately, three other senators — Richard Blumenthal (D-Conn.), Chuck Grassley (R-Iowa), and Amy Klobuchar (D-Minn.) — recently asked the Justice Department to investigate whether Mylan violated the False Claims Act by “knowingly” misclassifying EpiPen as a generic instead of a brand-name product.