WASHINGTON – Three members of the U.S. Senate, including Sen. Amy Klobuchar of Minnesota, have called on the U.S. Department of Health and Human Services (HHS) to explain how Mylan pharmaceutical's high-priced brand name EpiPen became classified as a "non-innovator" generic drug for purposes of Medicaid payments.
In a letter sent Wednesday to HHS Secretary Sylvia Burwell, Klobuchar, Richard Blumenthal (D-Conn.) and Kirsten Gillibrand (D-N.Y.) pointed out that Mylan and another company, UDL, paid $118 million in October 2009 to settle U.S. Justice Department charges that they "sold innovator drugs that were manufactured by other companies and had classified those drugs as non-innovator drugs for Medicaid rebate purposes."
EpiPen was not among those drugs. But Klobuchar said last week that Mylan's misclassification of EpiPens will cost Minnesota's Medicaid program an estimated $4.3 million in overpayments in 2016 because the product's "non-innovator" status significantly reduces rebates the company is required to pay to Medicaid administrators.
"This issue affects all states, not just Minnesota, Connecticut and New York. It is important to us to understand how the issue developed, whether it is limited to EpiPen, and how to best solve the problem," the senators wrote to Burwell. "We urge you to conduct a nationwide investigation to determine how much the misclassification of EpiPen has cost states and the federal government and what other drugs are misclassified."
Mylan has said EpiPen's "non-innovator" status predates its acquisition of the product in 2007. The company said the status is proper based on government guidelines for drug classifications. The company said it will seek to continue to have EpiPens classified as a "non-innovator" under a new federal rule that requires companies to reapply for the designation by April 1, 2017.
EpiPens, which are epinephrine-filled injectors, treat severe, sometimes life-threatening allergic reactions. Many children carry them. While experts said epinephrine is cheap and the auto-injector system is not costly to produce, Mylan has raised the cost of a two-pack of EpiPens from $100 in 2008 to $500 to $600 in 2016. The company gained a monopoly share of the market when a competitor had to recall its product because of dosing problems and the Food and Drug Administration delayed the entry of a generic into the market.
After accusations of price gouging by Klobuchar and others, Mylan recently announced plans to increase the value of a discount coupon it offers for consumers from $100 to $300. The company also doubled eligibility for a program designed to eliminate out-of-pocket costs for uninsured and underinsured EpiPen users. Finally, the company said it would bring an "authorized generic" to market.
None of those efforts has silenced the outcry from patient advocates and politicians. Mylan's stock price has taken a hit as the company became a symbol of drug prices run amok.
In addition to the letter to HHS, the Senate's Permanent Subcommittee on Investigations on Wednesday announced plans to look into Mylan's pricing of EpiPens.
In August, Klobuchar asked the Federal Trade Commission to investigate Mylan and the EpiPen as well.
Jim Spencer • 202-662-7432
