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Mylan may have overcharged Medicaid $1.3B for EpiPen, investigators say

The U.S. government's insurance program for the poor, Medicaid, may have overpaid Mylan NV by as much as $1.27 billion over a decade for its emergency anaphylaxis medicine EpiPen, government investigators said.

Sen. Charles Grassley, R-Iowa, chairman of the Senate Judiciary Committee, noted that the amount is far more than the $465 million Mylan agreed to pay to resolve charges the firm had incorrectly classified EpiPen as a generic drug rather than a brand-name medicine under the Medicaid drug rebate program.

Mylan's misclassification error had resulted in the company underpaying Medicaid rebates and overcharging states for the product, Grassley said in a May 31 statement.

The Iowa lawmaker said the Office of Inspector General at Health and Human Services notified him in a letter of the discrepancy. Grassley had asked the OIG to look into whether the $465 million settlement offer from Mylan was fair.

"The fact that the EpiPen overpayment is so much more than anyone discussed publicly should worry every taxpayer," Grassley said.

Mylan had claimed last fall it settled with the government, but in a Nov. 14, 2016, letter to Grassley, the Justice Department disavowed ever reaching such a deal.

In January, Andy Slavitt, who was the head of the Centers for Medicare and Medicaid Services at that time, told Grassley that nothing had changed in the matter.

Proper classification reporting

Congress created the Medicaid drug rebate program nearly 30 years ago to leverage the large volume of drugs the government purchases on behalf of low-income beneficiaries to obtain price concessions from pharmaceutical manufacturers. More than 600 drug manufacturers participate in the program, with over 23,000 medicines subject to rebates.

Over the past 25 years, the program has brought in $244.7 billion in rebates, Slavitt told Grassley in January.

But manufacturers are responsible for properly reporting the classification and ensuring they are paying the correct rebate amounts.

While Grassley said he has received records from CMS confirming that Mylan had misclassified EpiPen, he said the company has "repeatedly refused" to provide its records.

"The fact that Mylan is unwilling to cooperate and provide documents voluntarily makes me wonder what there is to hide and whether a subpoena is the only way to get to the bottom of this," Grassley said. "The government needs to do a much a better job of holding companies to their commitments in federal health care programs."

The senator said he would continue to push for accuracy under the Medicaid program and for Mylan to produce the requested records to the Judiciary Committee.

"Taxpayers have a right to know what happened here and to be repaid whatever they are owed," he said.

Grassley also noted he has been working on legislation aimed at lowering the costs Americans pay for their medicines.

"High prescription drug prices are a major concern across the country," he said. "As part of bringing down drug costs, we have to make sure companies that take part in federal health care programs aren't gaming the system."