A trio of senators are pressing for the Justice Department to investigate if Mylan defrauded a Medicaid rebate program with its EpiPen.
The senators wrote to Attorney General Loretta Lynch Wednesday that people want to know whether the generic drug maker violated federal law and “diverted millions of dollars from U.S. taxpayers.” While lawmakers have been raising the issue, it is the first request for the Department of Justice to investigate.
Mylan has ignited a public furor over raising the price of the allergy drug Epipen by 400 percent since acquiring it in 2007, now charging about $600.
The senators want the Justice Department to investigate the Medicaid rebate that Mylan had to pay for the EpiPen. To help states deal with higher drug prices, Medicaid forces drug makers to pay a part of their revenues back to the states in the form of rebates for drugs purchased via state Medicaid programs.
Mylan’s case centers on how it classified the EpiPen with the federal government.
Mylan has considered the EpiPen to be a brand name drug, which are forced to pay a higher rebate of 23 percent of the drug’s average cost, as they traditionally cost more than a generic.
But the senators contend that Mylan instead classified the EpiPen with the federal government as a generic drug, which has to offer a cheaper rebate of 13 percent.
Mylan has classified the EpiPen with the Centers for Medicare and Medicaid Services’ rebate program as a generic since acquiring it in 2007. However, when Mylan tried to quell the anger surrounding the price hike it introduced a cheaper, “generic” version of the brand-name EpiPen.
The letter — from Sens. Chuck Grassley, R-Iowa, Richard Blumenthal, D-Conn., and Amy Klobuchar, D-Minn. — pointed out that the Centers for Medicare and Medicaid Services earlier this month admitted the EpiPen was wrongly classified as a generic drug.
It is not clear how much money Mylan should owe the federal government because of the misclassification. However, Klobuchar said earlier this month that her state overpaid an estimated $4.3 million for one year.
It is the responsibility of the pharmaceutical company to determine whether its product is a generic or a brand name drug. So the senators want the Justice Department to investigate whether Mylan knowingly misclassified its product.
Mylan has violated federal law before, settling with the federal government in 2009 to resolve allegations it underpaid rebates for several drugs.
The drug maker said the EpiPen meets the definition of generic drug for the rebate program.
“EpiPen Auto-Injector has been classified as a non-innovator since long before Mylan acquired the product,” Mylan spokeswoman Nina Devlin said. “Mylan’s classification of EpiPen Auto-Injector as a non-innovator drug is consistent with longstanding written guidance from the federal government.”
The request for an investigation is the latest one to come from angry lawmakers.
Klobuchar and Blumenthal asked the Federal Trade Commission to investigate whether Mylan improperly hindered competition of the auto-injectors through exclusive contracts with schools in exchange for getting discounted pens.
New York and West Virginia’s attorneys general are conducting similar investigations.
A week ago, the House Oversight and Government Reform Committee scrutinized Mylan CEO Heather Bresch over the sharp price increases. Lawmakers left the hours-long hearing frustrated that Bresch couldn’t answer questions on EpiPen profits and research and development costs.
