Mylan's EpiPen pricing leads to Medicaid fraud suggestion by West Virginia AG

Mylan's EpiPen

Political pressure is building in Mylan’s EpiPen pricing scandal, including a probe in West Virginia that is hinting at the possibility of Medicaid fraud.  

West Virginia Attorney General Patrick Morrisey has filed suit to force Mylan to cough up some pricing information as part of an investigation there. The inquiry, among other things, is looking into what Mylan charged the state Medicaid program. “The petition suggests such conduct, if proven, could subject Mylan to a potential Medicaid fraud action under state law,” Morrisey said in a statement.

Morrisey, a Republican, said: “I have a statutory responsibility to investigate any potential antitrust violation.” He also pointed out that Mylan has a manufacturing facility in the state. He did not mention that the father of Mylan CEO Heather Bresch is a U.S. senator from West Virginia and up for reelection.

In a separate action, on Monday, Senate Finance Committee Republicans asked for the inspector general of Health and Human Services to investigate whether Medicaid drug rebates were properly handled by the agency after questions were raised about the level of payments made by Mylan ($MYLN).

Reports have suggested that Mylan has overcharged Medicaid by treating its EpiPen as a generic drug instead of an “innovator product.” Drugmakers pay Medicaid rebates of at least 23.1% of the average manufacturer price for branded drugs and 13% on generic drugs. Ephedrine, the drug in the EpiPen, is a generic, but its dominant place in the market has led some to question whether it should be classified otherwise.

Mylan, in an emailed statement to Reuters earlier this month, said it followed all laws and regulations regarding Medicaid rebates.

Mylan has become the current poster child for what is wrong with U.S. drug pricing after the public heard how Mylan raised the price of the treatment for allergic reactions about 400% since 2009 to more than $600 for a two-pack. Drug cost critics have pointed to everything from Mylan’s lobbying efforts in Congress to make EpiPen widely available at schools, to its headquarters move to Europe to cut its U.S. tax bill, to bonuses its execs received as sales of the product soared.

Mylan has responded by saying the cost of the product is justified by its value. It has pointed out that about 80% of people do not pay the full price. As the outrage has built, Mylan in quick succession widened its patient assistance program that helps people afford EpiPens, and has said it will begin selling a generic version at half the cost. But the actions so far have not quelled attacks.

Bresch is slated to testify today about the company’s pricing to the House Committee on Oversight and Government Reform. In what is expected to be a hot grilling by House members, she is expected to say that the real problem with drug pricing, including Mylan’s EpiPen, is how payers have shifted costs to patients, an approach that so far has not appeased politicians.

- here’s the court filing
- here’s letter to the HHS 

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