Pharmaguy's Insights Into Drug Industry News

Mylan will pay $465 million to settle claims that it overcharged states for its signature EpiPen, according to a Thursday Department of Justice press release. The company also signed an agreement with the federal government to enter into a review of its Medicaid pricing practices.

For years, Mylan classified EpiPen in a way that forced Medicaid to overpay for the product, according to the Centers for Medicare and Medicaid Services. The company may have overcharged taxpayers as much as $1.27 billion over 10 years, the Department of Health and Human Services’s watchdog organization said in May.

Lawmakers slammed the federal agencies on Thursday for letting Mylan get off the hook too easily with the settlement. Sen. Richard Blumenthal (D-Conn.) called it “completely insufficient,” and Sen. Chuck Grassley (R-Iowa) cast is as “disappointing” in statements. Mylan, meanwhile, called the settlement, “the right course of action,” and said that the product has been reclassified under Medicaid as of April 1.

[“Mylan ripped off the government big time,” said Public Citizen, “and the U.S. Department of Justice is letting the company get away with it. Mylan misclassified EpiPen in such a way as to provide less generous discounts to Medicaid purchasers than the law requires.

Today’s shameful settlement is for barely a third of the amount of the rip-off, and it fails to include an admission of guilt – an appalling omission for a decade-long scheme that enabled Mylan to fatten its bottom line by more than a billion.]

Further Reading:

• “Letters to "Pharma Sis" to Cut EpiPen Price to Improve Goodwill Will Fall on a Tin Ear”; http://sco.lt/8mfk5x
• “Mylan CEO Bresch, aka "Pharma Sis," Defends Price Gouging, Tax Evasion as Job Savers”; http://sco.lt/7uKmLB
• “FDA is Cause of Mylan's Monopolistic Pricing of EpiPen, Says WSJ. Allergist Has Cure.”; http://sco.lt/7F88nJ
• “Mylan's Patient Assistance is a "Convoluted Scheme," Says Public Citizen”; http://sco.lt/8NWO0H
• “Sarah Jessica Parker to Stop Shilling for Mylan Because of EpiPen Pricing: What Did She Expect?”; http://sco.lt/7oM4HZ
• “Awash in Criticism, Mylan Has Decreased its Fearmongering Awareness Advertising”; http://sco.lt/6WeuSv
• “Mylan, EpiPen Price Gouger, Ranks No. 2 in U.S. #Pharma Exec Pay!”; http://sco.lt/6lVvf7
• “Is There No End to Mylan's Shenanigans? Paying Off Patient Groups to Lobby!”; http://sco.lt/6Sl0ld
• “Mylan CEO's Mom Used Position with Education Group to Boost EpiPen Sales Nationwide”; http://sco.lt/8tL3kP
• “Yes, Mylan DID "Misclassify" EpiPen as a Generic, Says Medicaid”; http://sco.lt/5aJWEb
• “Mylan "Gamed the System" and Refuses to Testify at Senate Hearing About EpiPen Costs to Medicaid”; http://sco.lt/4mtPaj

Mylan may have overcharged taxpayers as much as $1.27 billion over 10 years for its signature EpiPens, according to an analysis released Wednesday by the Department of Health and Human Services’s watchdog.

The pharmaceutical company has been in hot water for potentially misclassifying its signature epinephrine auto-injector in a way that enabled it to charge a higher price to Medicaid (read “Mylan ‘Gamed the System’ and Refuses to Testify at Senate Hearing About EpiPen Costs to Medicaid”; http://sco.lt/4mtPaj). Because the pens were classified as generic, rather than brand-name products, Mylan paid Medicaid a 13 percent instead of a 23 percent rebate — despite the company being told its classification was incorrect. That allegation came to light in the fall.

In October, it was reported that Mylan agreed to a $465 million settlement over these accusations, although the status of this settlement remains unclear.

The new calculation of unpaid rebates underscores earlier concerns that taxpayers may get shortchanged by the proposed settlement. As Sen. Chuck Grassley (R-Iowa) noted in a statement, the $465 million settlement is much less than the $1.27 billion Mylan allegedly overcharged.

Now the first hard estimate of the overcharging, from the Office of the Inspector General for HHS, reveals that taxpayers may have paid as much as $444 million from 2006 to 2014, and $826 million from 2015 and 2016 — amounting to $1.27 billion in all. Letters from the inspector general stress that these estimates are limited because they do not take into account “supplemental rebates” that individual states may have received.

The Department of Justice declined on comment on the settlement Wednesday, saying that “there is no settlement to report.”

Further Reading:

• “Yes, Mylan DID ‘Misclassify’ EpiPen as a Generic, Says Medicaid”; http://sco.lt/5aJWEb