Senators demand Mylan repay $50 million to the Pentagon for EpiPen

A group of senators wants to know if Mylan Pharmaceuticals will refund $50 million for charging the Department of Defense “exorbitant rates” at retail pharmacies for the EpiPen emergency allergy device.

Their demand followed a Reuters report last week that Pentagon spending on EpiPen rose to $57 million over the past year from $9 million in 2008. The increased spending was due to price hikes and increased sales volume, but also due to lower rebates Mylan paid the Defense Department. And Mylan paid lower rebates because the company misclassified the device as a generic instead of a brand-name product.

Although the medicine in EpiPen, epinephrine, is a generic, the device that delivers the treatment is a brand-name, patented product. Mylan, however, had been reporting EpiPen as a generic product to government agencies for nearly a decade. This distinction is important, because these classifications are used to determine the size of rebates that companies pay.

The EipPen misclassification first emerged in connection with rebates paid to Medicaid, and Mylan recently agreed to a $465 million settlement. From 2011 to 2015, Medicaid paid $797 million on EpiPen, after rebates and dispensing fees, but the Centers for Medicare & Medicaid Services said the federal and state health care program for the poor should have spent much less.

“We are alarmed that Mylan may have overcharged our military for this life-saving drug,” Senators Chuck Grassley (R-Iowa), Amy Klobuchar (D-Minn.) and Richard Blumenthal (D-Conn.) wrote in their letter to Mylan chief executive officer Heather Bresch.

“In light of Mylan’s misclassification, the US Department of Veterans Affairs previously determined the EpiPen to not be eligible for the DoD retail refund program. As a result, DoD appears to have paid in excess of $50 million for the product over nearly a decade.”

Noting that Mylan previously indicated plans to “ ‘move forward and bring resolution to all EpiPen Auto-Injector related matters,’ it is imperative that you quickly resolve this additional discrepancy and take steps to refund our military for past overpayments,” they continued. “… We urge you to right this wrong quickly and completely.”

We asked Mylan for comment and will pass along any reply.

We should note that these are the same senators who 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.

Separately, West Virginia Attorney General Patrick Morrisey last week 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. And last month, 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.