The Obama administration warned Mylan multiple times that it had to give Medicaid more money to cover a higher rebate for the EpiPen.
The finding comes amid anger on Capitol Hill over Mylan’s 400 percent price increase of the EpiPen, which costs about $600. Sens. Ron Wyden, D-Ore., and Orrin Hatch, R-Utah, asked the Centers for Medicare and Medicaid Services to investigate whether Mylan was bilking Medicaid’s drug rebate program.
Other lawmakers have called for a Department of Justice investigation into the matter. Earlier this week, the House Oversight Committee called for more information on the profit the company has made from the life-saving allergy drug after being stymied by CEO Heather Bresch in a hearing last month.
Medicaid requires drugmakers to offer a rebate for their products to offset the costs for reimbursement. Under the program, brand name drugs must pay a rebate of 23 percent of the drug’s average cost and generics only 13 percent.
A review of CMS records indicates that the EpiPen has been reported as a generic drug since 1997. However, the EpiPen has patent protection and no competition, meaning it doesn’t meet the definition of a generic, according to a letter from CMS acting director Andy Slavitt released on Wednesday.
CMS told Mylan that the product, which the company bought in 2007, was incorrectly classified.
“This incorrect classification has financial consequences for the amount that federal and state governments spend because it reduces the amount of quarterly rebates Mylan owes for EpiPen,” the letter said.
CMS couldn’t comment on the total amount of rebates owed by Mylan.
Slavitt said that the agency tries to work with manufacturers if it discovers a drug is misclassified.
Manufacturers that fail to accurately report product and pricing data to the program and not pay the full rebate amount could be liable under the False Claims Act.
Mylan has settled prior lawsuits from the federal government that accused the drugmaker of violating the False Claims Act.
Slavitt also defended CMS’ approach to dealing with manufacturers that misclassify drugs.
He said that there is a narrow exception for a drugmaker to classify its product as a generic even though it may meet brand-name requirements.
“This is a narrow exception, which is available in very limited circumstances,” Slavitt said.
It doesn’t appear that the exception applies to Mylan. Regulatory guidance says a drug that has “patent protection or statutory exclusivity” doesn’t qualify for the exception, CMS said.
