By Bayley Weese
EpiPen is a life-saving drugs for hundreds of thousands of Americans who suffer from severe allergies. EpiPen is an autoinjector of epinephrine used to treat anaphylaxis resulting from extreme allergic reactions. The FDA first approved EpiPens in 1987, and Mylan acquired their rights in 2007. As of 2015, Mylan has about $1.5 billion in sales attributed to EpiPens.
Under the Medicaid Drug Rebate program, drugmakers and pharmaceutical companies pay rebates to Medicaid. The Medicaid Drug Rebate Program was created by the Omnibus Budget Reconciliation Act of 1990 and requires that drug manufacturers have a national rebate agreement with the Secretary of the Department of Health and Human Services, in order for states to receive federal Medicaid coverage of their products. Under this program, companies will pay less money if a drug is classified as generic. Although Mylan makes a generic version of EpiPen as well, but it was recently discovered that Mylan was paying the generic, and thus lower, rate to Medicaid for EpiPen.
A report by Kaiser Family Foundation released Oct. 7, 2016 details the expense Medicaid is paying for EpiPens. According to the report, Medicaid was paid an average of $137 before rebates per prescription in 2011, and in the last quarter of the year 2015, Medicaid paid an average of $447 before rebates per prescription – a 227% increase. However, Mylan admits no wrongdoing in the settlement, and claims that EpiPen has been classified as a generic drug since the original acquisition in 2007 and bases this claim on “longstanding written guidance from the federal government,” although unclear what this guidance is referring to. Rebates for generic drugs do not take into account when brand drug prices increase faster than inflation, while rebates for generic drugs do.
It makes sense that both Mylan and the government would settle this quickly, as it looks extremely bad on both parties. With all of the controversy surrounding Mylan and EpiPen recently, especially the increasing consumer price of an EpiPen, Mylan would have every reason to not want the public to know it has been fraudulently classifying the drug to overcharge the government for years. On the same front, the government doesn’t look so great either, as it let Mylan over charge them for so long, even though it claims that they had been telling Mylan they were falsely classifying the drug for many years.
The legal implication of this investigation and now settlement is crucial. More regulations are needed to make sure that pharmaceutical companies are not abusing the Medicaid Drug Rebate program by falsely classifying their brand name products are generics. Specifically, the Center for Medicare Services is not doing enough currently to prevent this from happening again in the future. Although CMS states they remained diligent, if pharmaceutical companies are not more closely watched in how they classify drugs for reimbursement, the Medicaid system could be increasingly taken advantage of in a similar fashion, depriving the United States’ only form of government assisted insurance the funds it rightfully deserves.
Student Bio:
Bayley is a 2L at Suffolk University Law School with a concentration is Trial and Appellate Advocacy. She is a Staff Member of the Journal of High Technology Law and a Team Member of Suffolk’s National Health Law Moot Court Trial Team.
Link:
http://money.cnn.com/2016/10/07/news/companies/epipen-mylan-465-million-fine/
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
