WASHINGTON – A group of 17 U.S. senators, including Minnesotans Amy Klobuchar and Al Franken, have raised new questions about Mylan Pharmaceuticals’ profit margins on its EpiPen epinephrine auto-injector.
In a Nov. 1 letter to Mylan CEO Heather Bresch, the senators called for the company to provide detailed breakdowns on pricing of the product for the uninsured, Medicare and Medicaid recipients, people with employer-provided health insurance and those insured individually as part of the Affordable Care Act.
The request comes amid charges of price gouging that saw the cost of an EpiPen two-pack rise from $99 in 2008 to $608 in 2016. The company has said it nets just $50 per EpiPen sold, a calculation that the senators said might have been driven down by an improper deduction of taxes.
Mylan did not post an immediate reaction to the senators’ letter on its website. But the company recently agreed to a $465 million payment to the U.S. Justice Department to settle charges that it misclassified EpiPens as a generic product instead of a brand-name device in order to lower the amount of rebates it owed to Medicaid, the government insurance program for the poor.
“The settlement terms provide for resolution of all potential rebate liability claims by federal and state governments as to whether the product should have been classified,” a Mylan news release said, announcing the settlement.
The company also agreed to enter into a “corporate integrity agreement” with the U.S. Department of Health and Human Services, which oversees Medicaid and Medicare.
The company admitted no guilt or wrongdoing.
In a statement to the Star Tribune, Klobuchar said, “Mylan still has many important questions to answer on its price hike on the EpiPen, including its misclassification and how much it has cost the federal government and American taxpayers.”
The Senate Judiciary Committee, on which Klobuchar and Franken serve, is scheduled to conduct a hearing Nov. 30 to examine EpiPen profits. In the meantime, Mylan is being pushed to provide specifics, such as the average pretax EpiPen revenue for Medicare recipients, Medicaid recipients and people with employer and private insurance. The company is also being asked for more detailed explanations of its “cost of goods” and “associated expenses” for each EpiPen 2-Pak.
The letter from the senators notes that the company’s Patient Assistance Program, which provided subsidies that were supposed to drive down out-of-pocket costs to the uninsured and underinsured accounted for less than 1 percent of total EpiPen sales from September 2015 to September 2016.
This and other information requested by the 13-page letter is designed to provide a clearer picture of how much Mylan has profited from EpiPen’s enormous price increase.
The letter said the Centers for Medicare and Medicaid Services (CMS) told Mylan “on multiple occasions” that the EpiPen, which treats potentially life-threatening allergic reactions, was misclassified. Now, the senators want Mylan to reveal exactly how much extra revenue it collected because of the generic classification. Manufacturers of brand-name drugs must pay a rebate of 23 percent to Medicaid, while makers of generic drugs pay a 13 percent rebate.
The letter notes that EpiPen’s long-standing generic classification likely profited Mylan more than the $465 million fine the company agreed to pay the government.
In a related action, Klobuchar and Sen. Richard Blumenthal (D-Conn.) sent a letter Wednesday to the Departments of Defense and Veterans Affairs asking how much DoD and the VA has paid for EpiPens and how much the departments have received in rebate payments from Mylan. Klobuchar and Blumenthal are trying to determine how much taxpayers would have saved if Mylan had paid rebates for a brand-name device instead of a generic.