Risk & Compliance

Mylan Underpaid U.S. on Rebates for EpiPen

A federal official says the drugmaker misclassified EpiPen, possibly costing Medicaid millions of dollars in rebates.
Matthew HellerOctober 6, 2016
Mylan Underpaid U.S. on Rebates for EpiPen

Mylan NV underpaid the federal-state Medicaid program in rebates owed on sales of EpiPen by misclassifying the emergency allergic reaction treatment as a generic drug, according to a federal regulator.

Andy Slavitt, acting administrator of the federal Centers for Medicare and Medicaid Services (CMS), said in a letter to lawmakers that EpiPen meets the definition of a brand-name product and the incorrect classification had “financial consequences” for the Medicaid program.

Under the generic classification, Slavitt said, Mylan paid a rebate of 13%, or $167 million, when it should have been paying a rebate of 23.1% or more. He declined to comment on how much Mylan may owe in unpaid rebates.

Slavitt was responding to an inquiry from Sen. Ron Wyden (D-Ore.) and Rep. Frank Pallone, Jr. (D-N.J.). Lawmakers have slammed Mylan for increasing the price of Epipen sixfold since acquiring the life-saving product in 2007.

“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 in a statement. “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.”

According to Slavitt, total Medicaid spending on EpiPen from 2011 to 2015 was $960 million, increasing from $66 million in 2011 to $365 million in 2015. The 13% rebate reduced the government’s bill to $797 million.

“CMS has, on multiple occasions, provided guidance to the industry and Mylan on the proper classification of drugs and has expressly told Mylan that the product is incorrectly classified,” Slavitt told the lawmakers, noting that it is the manufacturer’s responsibility to pay proper rebate amounts.

Mylan said Epipen “meets the definition of ‘non-innovator’ [generic] drug in the Medicaid rebate law” and that it has been classified that way since before the company acquired the product.