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Pallone, Wyden Confirm Epipen Makers Overcharged Medicaid For Two Decades

Oct 5, 2016
Press Release
Letter from CMS Demonstrates EpiPen Owner Mylan Was Advised Life-Saving Allergy Drug Was Misclassified as Generic, Resulting in Higher Costs for Medicaid

WASHINGTON – Senate Finance Committee Ranking Member Ron Wyden, D-Ore., and House Energy and Commerce Committee Ranking Member Frank Pallone, Jr. D-N.J., today issued a statement following a letter from Centers for Medicare & Medicaid Services (CMS) Acting Administrator Andy Slavitt regarding the misclassification of EpiPen as a generic drug for nearly two decades:
 
“Today’s letter is more evidence that while Mylan irresponsibly raised the price of EpiPen, they were also bilking taxpayers out of millions of dollars,” Wyden and Pallone said. “Essential medicines like EpiPen are increasingly out of reach for families across the nation due to unjustified price hikes, and it’s high time for drug companies to take responsibility for their actions. We will ensure taxpayers get their due.”
 
The letter from CMS backs up Wyden and Pallone’s claim that EpiPen has been misclassified as a generic drug since the fourth quarter of 1997, despite all evidence indicating it was a brand-name drug. The letter also notes that Medicaid has spent nearly $800 million on EpiPen since 2011, which includes the lower generic rebate of 13 percent, which the drug manufacturer is required to pay back to Medicaid. The correct rebate would have been at least 23.1 percent, plus an additional inflationary rebate.
 
CMS also confirmed to Wyden and Pallone that the agency “expressly told Mylan that the product is incorrectly classified”, however, that it is the responsibility of drug manufacturers for ensuring their products are correctly classified. Additionally, CMS has provided guidance to industry and Mylan regarding the proper classification of drugs and the steps that should be taken to correct any improper classifications. Wyden and Pallone said they will continue to push CMS for specific information about how and when these communications occurred.  The two leaders will also review whether or not CMS has sufficient authority and resources to ensure that drugs are properly classified.  
 
The full letter from CMS can be found here.
 
Background:
 
As a part of the Medicaid Drug Rebate Program, pharmaceutical companies wishing to sell their products in the program are required to pay a rebate to help make their drugs more affordable. For brand-name drugs, pharmaceutical companies are required to pay to the federal government a discount that is the greater of either 23.1 percent of the Average Manufacture Price (AMP) or AMP minus the “best price” for the drug, plus an additional discount if a drug’s price increases faster than the rate of inflation. The discount for generic drugs is lower, at 13 percent of the AMP.
 
Last month, Wyden and Pallone sent a letter to Health and Human Services (HHS) Secretary Sylvia Mathews Burwell requesting additional information regarding EpiPen’s classification and rebate obligations under the Medicaid Drug Rebate Program, following revelations that Medicaid may have been grossly overpaying for the EpiPen, now owned by Mylan Pharmaceutical, since 1997 due to a misclassification of the drug as a generic.

Subcommittees: