EpiPen scan­dal deep­ens

Fed­eral gov­ern­ment: My­lan has been over­charg­ing for life-sav­ing al­lergy shot

Daily Local News (West Chester, PA) - - BUSINESS - By Linda A. John­son AP Med­i­cal Writer

TREN­TON, N.J. » Even the fed­eral gov­ern­ment is ap­par­ently pay­ing too much for EpiPens, along with an­gry pa­tients and in­sur­ers.

The sky­rock­et­ing price of the life-sav­ing al­lergy shot, which has trig­gered a storm of crit­i­cism, is only part of the prob­lem. Now the fed­eral gov­ern­ment, re­spond­ing to Con­gres­sional in­quiries, says Med­i­caid for years has been pay­ing too much for EpiPens be­cause the emer­gency shot is clas­si­fied in­cor­rectly as a generic medicine.

The fed­eral gov­ern­ment says EpiPen is a branded drug, which means the drug’s maker, My­lan, should have been pay­ing the gov­ern­ment a far higher re­bate un­der the gov­ern­ment’s com­plex pric­ing rules.

My­lan, which has been blasted for hik­ing the price of a pair of EpiPens to $608 from $94 since 2007, de­nies wrong­do­ing. It says that EpiPen meets Med­i­caid’s def­i­ni­tion of a generic prod­uct and that it was clas­si­fied that way when My­lan ac­quired rights to the prod­uct in 2007.

The com­pany could face steep penal­ties, though.

Ac­cord­ing to the Cen­ters for Medi­care & Med­i­caid, man­u­fac­tur­ers that pay in­suf­fi­cient re­bates may be fined by the De­part­ment of Health and Hu­man Ser­vices for vi­o­lat­ing the re­bate rules, sued for over­charg­ing the gov­ern­ment or hit with other pen-


CMS spokesman Aaron Al­bright would not com­ment Thurs­day on whether the agency would try to cor­rect the mis­clas­si­fi­ca­tion of EpiPen, re­coup money, or seek penal­ties from My­lan.

But in a let­ter sent late Wed­nes­day to sen­a­tors and con­gress­men prob­ing EpiPen’s ex­or­bi­tant price hikes, Andy Slavitt, act­ing direc­tor of CMS, wrote that EpiPen doesn’t meet the def­i­ni­tion of a generic drug be­cause it was ap­proved as a brand-name drug and is pro­tected by a patent. Slavitt wrote that CMS “has ex­pressly told My­lan that the prod­uct is in­cor­rectly clas­si­fied.”

Al­bright couldn’t im­me­di­ately say when My­lan was told that, but said the phar­ma­ceu­ti­cal in­dus­try was given guide­lines ex­plain­ing the clas­si­fi­ca­tions in 2010.

For nine years, the gov­ern­ment says, My­lan has been pay­ing re­bates of 13

per­cent, as re­quired for generic prod­ucts when it should have been pay­ing the 23.1 per­cent re­bate re­quired for brand-name drugs.

In ad­di­tion, CMS said My­lan hasn’t been pay­ing Med­i­caid a sec­ond re­bate that is re­quired when­ever the price of a brand-name drug price rises more than in­fla­tion. The price of an Epipen pack rose 23 per­cent a year on av­er­age be­tween 2007 and 2016. In­fla­tion has av­er­aged less than 2 per­cent a year over the same pe­riod.

The prior maker of EpiPen ap­par­ently also was un­der­pay­ing. CMS records in­di­cate the prod­uct’s sta­tus was changed from brand-name to generic in the fourth quar­ter of 1997, ac­cord­ing to Slavitt’s let­ter. It’s un­clear why the change was made.

My­lan said in a state­ment that it “sim­ply con­tin­ued to clas­sify the prod­uct the same way,” as that was “con­sis­tent with long­stand­ing writ­ten guid­ance from the fed­eral gov­ern­ment.”

The amount Medi­care and Med­i­caid spent on EpiPens rose to $486.8 mil­lion in 2015 from $86.5 mil­lion in 2011, a jump of 463 per­cent, Slavitt’s let­ter says.

In re­sponse, Se­nate Fi­nance Com­mit­tee mem­ber Ron Wy­den, D-Ore­gon, and House En­ergy and Com­merce Com­mit­tee mem­ber Frank Pal­lone, DNew Jersey, said in a state­ment that My­lan is “bilk­ing tax­pay­ers out of mil­lions of dol­lars.”

My­lan shares fell 3 per­cent to $36.84 Thurs­day.


My­lan CEO Heather Bresch holds up EpiPens on Sept. 21 while tes­ti­fy­ing on Capi­tol Hill in Wash­ing­ton, be­fore the House Over­sight Com­mit­tee hear­ing on EpiPen price in­creases. Now the fed­eral gov­ern­ment, re­spond­ing to Con­gres­sional in­quiries, says EpiPen’s maker has been over­charg­ing Med­i­caid for years be­cause the emer­gency shot is clas­si­fied in­cor­rectly as a generic medicine, so My­lan has been pay­ing the gov­ern­ment much-lower re­bates off the price than it should.

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