US may have overpaid $1.3B for Mylan's EpiPen, HHS watchdog says
- The U.S. government may have overpaid by nearly $1.3 billion over the last decade for Mylan's EpiPen autoinjector, an estimate by the Department of Health and Human Services Office of Inspector General suggests.
- At issue is how Mylan classified EpiPen for the purposes of calculating mandated drug rebates through Medicaid. EpiPen has historically been classified as a generic product rather than a brand-name product, a distinction that lowers the level of discount Mylan owes through the Medicaid Drug Rebate Program (MDRP).
- The sum is significantly higher than the $465 million Mylan said it would pay in a settlement with the Department of Justice to resolve questions surrounding EpiPen's classification. That agreement has yet to be finalized and the new estimate from HHS, made public by Senator Chuck Grassley, R-IA, could be a sign Mylan's troubles over EpiPen haven't been put to rest just yet.
Mylan's announcement of the settlement with the DOJ last October looked like a positive step forward for the company after months of intense criticism over price increases for EpiPen. At the time, company CEO Heather Bresch said the agreement would "bring resolution to all EpiPen auto-injector related matters."
Now, however, it looks like that may not be the case. Not only has the settlement not been finalized, but more pressure could be coming from Senator Grassley and the Senate Judiciary Committee.
In a statement on the overpayment estimate, Grassley said the Centers for Medicare and Medicaid Services had recently provided records to the Judiciary Committee which allegedly show Mylan had been warned of EpiPen's misclassification yet did not take action.
Mylan has apparently refused to provide its records of those communications to the committee, leading Grassley to hint a subpoena may be forthcoming.
"The fact that Mylan is unwilling to cooperate and provide documents voluntarily makes me wonder what there is to hide and whether a subpoena is the only way to get to the bottom of this," Grassley said in the prepared statement.
Mylan continues to work with the government to finalize the settlement, a company spokesperson said in response to a request for comment Thursday.
It's important to note that there are several limitations to the HHS Office of Inspector General's (OIG) estimate. Under the MDRP, drugmakers owe a base level rebate on drugs classified as generic products — currently 13% of the average manufacturer price (AMP). Mylan paid rebates for EpiPen using this rebate formula from 2006 through 2016.
For brand-name drugs, however, the basic rebate is whichever is greater of two options: either a fixed 23.1% of the AMP or the difference between the AMP and the drug's "Best Price," a figure drugmakers report to the government.
The OIG calculated the $1.27 billion estimated overpayment by calculating the differential between what Mylan paid with EpiPen classified as generic and what Mylan would have paid under the first of those two brand-name formulas.
But since Mylan didn't report EpiPen's Best Price to the government, the OIG wasn't able to calculate both options.
Mylan would have also owed an inflation-related rebate for EpiPen if the drug was classified as branded.
Another caveat: the OIG made no determination whether Mylan's classification of Epipen was actually improper, nor did it make any estimate on what amount (if any) the federal government should seek to recover from Mylan.
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