Taking aim at Medicaid misclassifications like Mylan's EpiPen, senators look to end a 'pharma ripoff'

Mylan's EpiPen
Mylan faced scrutiny on EpiPen in 2016 and 2017 for huge price hikes and a Medicaid misclassification that cost taxpayers hundreds of millions. (Greg Friese/Flickr)

Amid Mylan’s EpiPen pricing firestorm in 2016 and 2017, the company came under fire for misclassifying the lifesaving injector as a generic on Medicaid, allowing it to drastically underpay rebates. Now, two senators want to put an end to that type of “pharma ripoff.” 

Sens. Ron Wyden, D-Ore., and Chuck Grassley, R-Iowa, introduced a bill called the Right Rebate Act of 2018 to fight pharma drug misclassifications that cost taxpayers. As it stands, HHS can’t force companies to reclassify their drugs on Medicaid or issue fines when it finds an error.

The lawmakers cited Mylan’s case as a prime example—and one that cost taxpayers hundreds of millions. In 2016, as the drugmaker came under fire for large and routine price hikes, the Centers for Medicare and Medicaid Services found that Mylan had misclassified EpiPen as a generic rather than a branded medication. With that misclassification, Mylan paid lower rebates to Medicaid on its drug.

Quickly after the disclosure, Mylan inked a $465 million proposed settlement with the Department of Justice. The deal came under heavy scrutiny from lawmakers—including Sen. Grassley—for being too generous to Mylan. In fact, HHS calculated that the misclassification could have cost taxpayers more than $1 billion. According to the DOJ, it was rival drugmaker Sanofi that blew the whistle on Mylan’s misclassification.

RELATED: Mylan lowballed Medicaid on EpiPen by $1.27B, far more than its DOJ settlement: HHS 

Now, the lawmakers want to give HHS the power to crack down on misclassifications. The bill would also require the agency to report to Congress about its enforcement.

In a statement, Wyden said he's hopeful the bill "will become law by the end of the year and set the tone for the important work that lies ahead to lower prescription drug prices for families across the country.” 

Mylan's Medicaid scrutiny was only part of its EpiPen scandal in 2016 and 2017. In the summer of 2016, the company came under fire for routine price hikes that made it difficult for consumers to afford the drug. The company has since rolled out an authorized generic, and Teva recently launched a generic at the same list price as Mylan's authorized copy: $300 for a two-pack.