Biotech and Pharma

Mylan, health officials pressed on EpiPen 'misclassification'

Heather Bresch, chief executive officer of Mylan NV, holds up Mylan EpiPen medication while speaking during a House Oversight and Government Reform Committee hearing in Washington, D.C., U.S., on Wednesday, Sept. 21, 2016.
Andrew Harrer | Bloomberg | Getty Images

Another day, another letter from Congress about EpiPen.

A U.S. Senator asked big drugmaker Mylan and federal health officials Tuesday for information about a purported misclassification by the company of its anti-allergy EpiPen devices that would shortchange federal and state governments millions of dollars annually in Medicaid rebates.

Such a misclassification also could put Mylan at risk of steep fines.

Sen. Charles Grassley's letters came a day after a House committee wrote Mylan CEO Heather Bresch asking for a laundry list of documents as it seeks to learn the true profitability of the lifesaving EpiPens for Mylan. Committee members expressed skepticism about Bresch's recent testimony on that point.

Congress has focused on Mylan since late summer, when public outrage exploded over the company raising the price of a two-pack of EpiPens to more than $600, more than 500 percent what the devices were selling for several years ago. The auto-injector is used to counteract the potentially fatal allergic reaction anaphylaxis.

The letters from Grassley, R-Iowa, to Bresch and to the head of the federal Centers for Medicare and Medicaid Services relate to Mylan's participation in the Medicaid Drug Rebate Program.

That program requires participating pharmaceutical companies to pay rebates to the federal and state governments that jointly run Medicaid — the health coverage scheme for primarily the poor — in exchange for having their medications covered by Medicaid.

Grassley's letters asked, among other things, when CMS told the company it had misclassified the drug for the Medicaid Drug Rebate Program, how many times the agency told Mylan that was the case, and what, if anything, the Obama administration has done "to ensure that the EpiPen was properly classified."

At stake is a significant amount of money. Mylan currently pays rebates of 13 percent to Medicaid for sales of EpiPens through that program because it classifies the device as a generic product, or "non-innovator multiple source drug." But CMS last week said Mylan should be paying rebates of more than 23.1 percent because EpiPen should be classified as a brand-name product.

CMS says it has repeatedly told Mylan the company was misclassifying EpiPen. But the agency has refused to say what, if anything, the agency is doing to "correct this misclassification.

"Given the purported misclassification, the federal government and the states may have paid far more for EpiPens than required," Grassley wrote in his letter to acting CMS administrator Andy Slavitt.

"It would be helpful for Congress and the American public to understand what steps, if any, the Obama Administration has taken under its authorities to ensure that companies are not gaming the system and are appropriately held accountable for misclassifying their products," Grassley wrote.

The letter said that knowing when and how many times Mylan was told it misclassified EpiPen "is critical in determining how much Mylan should have paid during the course of the rebate program."

Last week, Sen. Amy Klobuchar, D-Minn., said that the Minnesota Health Department has reported that a misclassification of EpiPen would have cost the state's Medicaid program $4.3 million in overpayments for this year alone. Minnesota accounts for less than 2 percent of the U.S. population.

Grassley noted in his letter to Slavitt that if Mylan is found to have filed false information with the rebate program, the company would face fines of $100,000 for each instance.

CMS had no comment on Grassley's letter.

Mylan said it had received Grassley's letter "and will be responding."

Last week, when CMS revealed it had repeatedly admonished the company for misclassifying EpiPens, Mylan said the company had "previously stated that the EpiPenAuto-Injector meets the definition of 'non-innovator' drug in the Medicaid rebate law."

"EpiPen Auto-Injector has been classified as a non-innovator since long before Mylan acquired the product," a Mylan spokeswoman said at the time. "Mylan's classification of EpiPen Auto-Injector as a non-innovator drug is consistent with longstanding written guidance from the federal government."