Dive Brief:
- Key members of the Senate Judiciary Committee on Wednesday asked the attorney general to investigate whether Mylan knowingly misclassified EpiPen to pay for lower Medicaid rebates and "reap huge profits at the expense of taxpayers."
- The Centers for Medicare and Medicaid Services said it has repeatedly told Mylan it was wrong with the classification.
- Mylan fired back, saying its classification is consistent with longstanding guidance from the federal government.
Dive Insight:
Mylan’s classification of EpiPen more than a decade ago as a generic drug under the Medicaid drug rebate program raises questions about whether the company improperly reaped millions of dollars.
The rebate program requires drug companies to pay a percentage of their revenues to states in the form of rebates. Under the program, companies like Mylan are required to pay a higher rebate for brand-name drugs than for generic drugs.
In a letter to the Justice Department released Wednesday, a bipartisan group of Judiciary Committee members led by Sen. Chuck Grassley (R-IA) chairman of the Judiciary Committee, cited claims that Mylan may have knowingly misclassified EpiPen.
Possible Mylan violations of the False Claims Act were indicated in the "plain text of the relevant statute" and Mylan’s "own behavior," the senators said. The letter noted that Mylan increased its prices dramatically for EpiPen, including a rise from $265 to $609 in the last three years.
Later Wednesday, CMS acknowledged in an email to Biopharma Dive and other media outlets that it had repeatedly asked Mylan to correct its wrong classification.
Because Mylan has misclassified EpiPen and EpiPen Jr as generics for Medicaid Drug Rebate Purposes, it is paying a lower percent rebate to Medicaid, 14% compared to 23% for brand name drugs. It also is not paying an inflation rebate that is required by states, said CMS spokesman Aaron Albright in the e-mail. Although the government allows for some exemptions for new drug applications, such as EpiPen, CMS made clear Mylan didn’t qualify, the agency said.
"CMS has, on multiple occasions, provided guidance to industry and Mylan on the proper classification of drugs and has expressly advised Mylan that their classification of EpiPen for the purposes of the Medicaid drug rebate program was incorrect," said Albright.
Mylan, which faces a host of other congressional and state probes, is ready to fight the CMS interpretation. In a statement to BioPharma Dive, a company spokeswoman noted that that EpiPen was classified as non-innovator years before Mylan acquired it, and is "consistent with longstanding written guidance from the federal government."