Did Mylan find a way to overcharge Medicaid for EpiPen? Senators ask DOJ to find out

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Mylan has been fighting for more than a year to block Teva’s generic version of its pricey EpiPen. It recently said it would launch its own authorized generic, in an attempt to appease angry patients and politicians.

But all along EpiPen itself has been classified as a "non-innovator" drug for Medicaid patients--and now, U.S. senators are calling on the Justice Department to find out why.

Sens. Richard Blumenthal, Charles Grassley and Amy Klobuchar, who’ve all urged other government agencies to probe EpiPen pricing, on Wednesday demanded that Attorney General Loretta Lynch investigate EpiPen’s classification under Medicaid.

The classification is important because it determines the rebates drugmakers pay back to state Medicaid programs. For “non-innovator multiple source” drugs--typically generics--the rebate is 13%. For “innovator” products, rebates are a minimum of 23.1%. In essence, generic drugmakers keep a larger share of a drug’s price than branded drugmakers do.

For Mylan, that would mean higher Medicaid revenue from EpiPen, and a bigger profit margin for the product, than if the epinephrine injection was deemed as an innovative drug--both funded by the taxpayer money that supports Medicaid.

“Companies can reap huge profits, at the expense of the states and taxpayers, by misclassifying innovator drugs,” the senators’ letter states.

It's true that the drug inside the EpiPen is a cheap generic. But Mylan has made much of its EpiPen injector design, and the "non-innovator" classification contradicts one of Mylan's defenses of its EpiPen price increases. CEO Heather Bresch has repeatedly said that increased EpiPen sales have allowed the company to spend significant amounts of money to further improve the product.

There’s no question that EpiPen is classified at the lower rebate level under Medicaid. The question is how it ended up on that list. “The … facts suggest that Mylan may have knowingly misclassified EpiPens, potentially in violation of the False Claims Act and other statutes,” the senators’ letter states.

Wednesday’s letter follows a similar request--from the same senators--that the Department of Health and Human Services investigate whether Mylan properly handled Medicaid drug rebates on EpiPen.

Mylan has said that it followed all laws and regulations governing Medicaid rebates.

Also last week, the attorney general of West Virginia said he was investigating Mylan’s pricing and its bills to the state’s Medicaid program. AG Patrick Morrisey, a Republican, said Mylan could face a potential Medicaid fraud action under state law, depending upon the evidence he uncovers.

Klobuchar, Blumenthal and fellow senator Kirsten Gillibrand raised the Medicaid rebate question last month with CMS. After discovering EpiPen had been misclassified, they called on HHS to look into “the circumstances of the EpiPen misclassification” and to investigate whether other drugs had been misclassified in the same way.

This latest EpiPen letter adds to the growing stack of missives calling for one agency or another to investigate Mylan and its EpiPen price increases, which hiked the sticker on the epinephrine injectors by more than 400% over a 5-year period. And it comes just after a hearing convened by the House Committee on Oversight and Government Reform, at which Bresch testified about EpiPen sales, costs and marketing.

The committee is probing further now, seeking internal documents to back up Bresch’s claims--particularly now that the company has disclosed calculations that suggest the EpiPen profits she quoted to Congress were understated by about two-thirds.

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