Congress hasn’t had much luck getting specifics out of Mylan when it comes to its yearslong underpayment of Medicaid rebates. Now some lawmakers are demanding info from federal officials instead.
In a six-page letter (PDF) to the Centers for Medicare and Medicaid Services, the House Committee on Energy and Commerce and the Senate Finance Committee demanded to know why agency officials didn’t force Mylan to fix the EpiPen rebate problem. And they want to know how much money, exactly, CMS lost to unpaid rebates over the years.
That’s a loaded question, given that the U.S. Justice Department inked a quick settlement with Mylan this fall, just two weeks after news of the underpaid rebates broke. Already under fire for EpiPen price increases of 400% over five years, Mylan agreed to pay $465 million to settle allegations that it had lowballed rebates—an amount that fell short of some analyst calculations and has since been questioned by lawmakers on Capitol Hill.
The rebate problem itself stemmed from one piece of misinformation: Mylan had misclassified the epinephrine auto-injector as a generic drug—subject to lower Medicaid rebates—rather than an “innovator” drug as it should have been, given its market exclusivity and patented injector. CMS Acting Administrator Andy Slavitt said in September that the agency had repeatedly notified Mylan that the product was mistagged.
Demanding answers
Was that as far as CMS went to enforce its rules? And if so, why? That’s what Reps. Fred Upton and Joseph Pitts, and Sens. Orrin Hatch and Tim Murphy want to know.
Addressed to Slavitt, the letter says CMS could have taken action, along with the Department of Justice and the Health and Human Services Office of Inspector General. Penalties for knowingly providing false information to the agency can be as high as $100,000 for each false item, the letter states.
Which begs a question, and the letter asks it: Before July 2016—when the EpiPen pricing controversy began to bubble—“did any CMS staff discuss the possibility of working with DOJ or HHS OIG” to pursue financial penalties?
That query is one in a list that spans three pages. The letter demands answers and any related documents by Dec. 20.
Upton, et al's detailed letter is something of an end run around Mylan itself, which has been less than forthcoming to Sen. Charles Grassley’s attempts to garner similar information. It also follows Grassley's attempt to haul CMS officials—along with representatives of the Justice Department—to a committee hearing to answer questions about the quick Medicaid rebate settlement.
Lawmakers and officials have characterized the DOJ-Mylan deal as a “sweetheart” agreement and “a shadow of what it should be." Some analysts calculated potential liabilities several hundred million higher, and the company disclosed in a securities filing that the Securities and Exchange Commission was also investigating the underpaid rebates.
Dodging accountability?
Mylan CEO Heather Bresch refused to appear at Grassley’s hearing about the DOJ deal and the events leading up to it, citing the “pending” nature of that agreement. The settlement is awaiting final approval from Justice Department higher-ups but—in another move that lawmakers have questioned—Mylan announced it as soon as the company agreed to the DOJ’s terms.
CMS and DOJ officials also declined to attend the hearing, so Mylan wasn’t alone. But Grassley hit back at the time, saying the agencies are “dodging accountability for an expensive problem” and Mylan is following that “bad example.”
“One way or another, I intend to get answers for patients and taxpayers,” Grassley said.
Since then, when Bresch appeared at a Forbes summit on the very day the hearing had been scheduled, Grassley poked at Mylan again: “If CEOs can voluntarily appear at health summits, surely they should voluntarily appear before a Senate committee,” the senator said.
Meanwhile, investors aren't happy either, given the suffering all this bad news has dealt to Mylan's shares. In October, the Bernstein Liebhard law firm announced a shareholder suit demanding damages.