The federal government is claiming Mylan, run by Sen. Joe Manchin’s daughter Heather Bresch, overcharged the federal-state Medicare program millions of dollars over the past half-decade for EpiPens.
When Mylan acquired the device in 2007, the cost of the drug to consumers was just $56.64, according to CBS News. By 2015, Bresch had spiked the price to $317.82. The price of the epinephrine inside the EpiPen is just $1.
Andy Slavitt, acting administrator for the Centers for Medicare and Medicaid Services (CMS), wrote a letter Wednesday stating Mylan misled the federal government by labeling the EpiPen device as generic when it is actually a brand name product, the Journal reports.
As a result of this mislabeling, Mylan paid a rebate rate of 13 percent — amounting to $163 million — when it should have paid at least a 23 percent rate, Slavitt claims.
In response to the allegation, Mylan told The Daily Caller News Foundation that “the EpiPen Auto-Injector meets the definition of “non-innovator” drug in the Medicaid rebate law.” The company also said that the EpiPen, “has been classified as a non-innovator since long before Mylan acquired the product,” and as a “non-innovator drug it is consistent with longstanding written guidance from the federal government.”
Classifying the EpiPen as a “non-innovator” drug is a clever way of labeling it a generic product.
In a letter from CMS to Sen. Ron Wyden, it explains, “CMS has, on multiple occasions, provided guidance to the industry and Mylan on the proper classification of drugs and has expressly told Mylan that the product is incorrectly classified.”
Goldman Sachs weighed in on the issue as well, saying that: “Any changes made to the rebate classification in 1997 pre-dated Mylan’s acquisition of the product by almost a decade. Mylan simply continued to classify the product the same way it had been classified before Mylan acquired the product. The longstanding written guidance provided by the federal government is consistent with how the product was classified dates back to the 1997 time frame.”
The federal government adopted new rules to intended to clarify the cloudy aspects of the Medicare rebate laws, Mylan explains.
“The rule establishes a new process for pharmaceutical companies to follow if they have products, like EpiPen®, approved under a what the FDA calls a “new drug application” that they believe should continue to be treated as a non-innovator drug,” Mylan tells TheDCNF.
Mylan is filing for approval for “non-innovator” status on, or before, April 1 of 2016, with the CMS. The company tells TheDCNF it would be “premature to comment further on this issue until the CMS process has concluded.”
In the first two years (2008 and 2009), Bresch raised the price five percent a year. At the end of 2009, she hiked the price 19 percent. For the next three years, she raised the price at a steady rate of 10 percent a year, reports CBS News. EpiPen’s profit margins were 55 percent in 2014, up substantially from 9 percent in 2009, according to Bloomberg.
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