Sen. Grassley: EpiPen maker overcharged taxpayers almost $1.3B

Sen. Grassley: EpiPen maker overcharged taxpayers almost $1.3B

Grassley has pressed EpiPen maker Mylan and the Centers for Medicare and Medicaid Services (CMS) for documentation and answers on why EpiPen was misclassified under the Medicaid Drug Rebate Program, resulting in overcharges to the states and taxpayers.

Put off by what they see as exorbitant pay for Mylan executives, some big pension funds are attempting to block the reelection of a number of board members, including Chairman and former Chief Executive Robert Coury, who received $100 million a year ago. Chuck Grassley, claiming that the drugmaker may have conned taxpayers out of more than $1 billion by misclassifying EpiPen as a generic, rather than a brand-name drug. Taxpayers ended up with a bigger bill.

Grassley called the $465 million settlement for Mylan's failure to correct its misclassification of the drug too small. "Taxpayers have a right to know what happened here and to be repaid whatever they are owed". The basic rebate amount for a generic drug is based on a percentage (currently 13%) of its average manufacturer price (AMP).

During her appearance before the House Oversight and Government Reform Committee in September, Mylan CEO Heather Bresch defended the company's decision to raise the price of EpiPens six-fold since 2007.

Mylan's announcement of the settlement with the DOJ last October looked like a positive step forward for the company after months of intense criticism over price increases for EpiPen.

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For brand-name drugs, however, the basic rebate is whichever is greater of two options: either a fixed 23.1% of the AMP or the difference between the AMP and the drug's "Best Price", a figure drugmakers report to the government.

Analysts have said that because of that, Mylan, which raised the price of EpiPen by more than 500 percent in recent years, could have owed Medicaid rebates that were almost equal to the dollar amount of EpiPen sales through the program. Mylan had repeatedly denied underpaying the rebates, but then agreed to a settlement with the Justice Department to resolve such claims, and also agreed to treat EpiPen as a brand-name product this year for the goal of rebates.

EpiPen is an epinephrine injection used to treat life-threatening allergic reactions, including anaphylaxis, in people who are at risk for or have a history of serious allergic reactions.

Based on these factors, the OIG determined the estimated rebate differential to be $1.27 billion for 2006 through 2016. Mylan has repeatedly refused to provide its records of those communications with CMS to the Committee.

The letter noted the decline in Mylan shares, which now trade for around $40, less than half the $82 that rival Teva Pharmaceuticals had offered to buy the company for in April of 2015.

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