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Mylan EpiPen probe triggers broader Medicaid rebate scrutiny

Lawmakers are not letting up on their efforts to get to the bottom of why the Medicaid program misclassified Mylan NV's emergency anaphylaxis auto-injector medicine EpiPen as a generic rather than an innovator drug, and now government investigators are getting involved.

The misclassification resulted in the company underpaying Medicaid rebates and overcharging states for the drug.

Mylan claimed in early October that it had reached an agreement with the U.S. Justice Department to pay $465 million to settle the misclassification dispute. But the Justice Department maintained that there had been no executed settlement.

Sen. Charles Grassley, chairman of the Senate Judiciary Committee, had scheduled a Nov. 30 hearing to flesh out the situation, but Mylan's CEO and the Centers for Medicare and Medicaid Services and the Justice Department refused to testify, so the lawmaker postponed the hearing.

Grassley's spokeswoman, Jill Gerber, told S&P Global Market Intelligence that the senator was considering issuing subpoenas as an option to compel the company and the agencies to testify and was still looking at potential dates for a rescheduled hearing.

EpiPen initially grabbed Capitol Hill's attention earlier this year when patients complained that the list price of the life-saving product had leaped to over $600. A closer look revealed the Medicaid program had been overpaying for the product.

In two Dec. 6 letters, Daniel Levinson, inspector general for the Department of Health and Human Services, said his office shared House and Senate lawmakers' concerns about CMS' oversight and management of the Medicaid drug rebate program and would conduct three new reviews of data accuracy and validity.

The reviews will examine the accuracy of CMS' Medicaid rebate classification data and the tools and processes the agency has in place to ensure that manufacturers are in compliance with the program.

The investigators will also examine the Food and Drug Administration's approval standing of drugs paid for by Medicaid and determine what operations CMS undertakes to review that status and how the agency prevents inappropriate payments for unapproved medicines in the program.

In addition, the investigators will take a look at manufacturers' "reasonable assumptions" when calculating drug prices used for Medicaid rebates and talk to CMS staff about the agency's oversight of those industry submissions.

Meanwhile, four lawmakers demanded more answers from acting CMS administrator Andy Slavitt about the classification mix-up.

CMS earlier claimed that it had warned Mylan about the misclassification, but the company denied those assertions.

In a Dec. 9 letter to Slavitt, made public Dec. 12, Reps. Fred Upton, Joseph Pitts and Tim Murphy, chairman and subcommittee heads, respectively, of the House Energy and Commerce Committee, and Sen. Orrin Hatch, chairman of the Senate Finance Committee, called for details about what CMS and Mylan knew about the misclassification and what action they took to bring the company into compliance.

The four congressmen also wanted to know how much the government could have saved had CMS ensured that EpiPen was properly classified.