By now you’ve heard about or even contributed to the media uproar over Mylan’s price hike on the EpiPen of over 600 percent. You also probably heard about Mylan’s attempts to get back in the public’s good graces, like selling a “generic” (identical) version for half the price (still about $300), or like offering aid for uninsured or under-insured patients (but only up to $300). To give you some perspective, a two-pack of EpiPens had a list price of more than $725 at both Kroger and Target.
If you forgot about EpiPen headlines until now, it’s probably because the media is concerned with other… things. But on Oct. 7, Mylan agreed to a $465 million settlement with the U.S. Department of Justice and other agencies over the classification of its anti-allergy EpiPen Auto-Injector under the Medicaid Drug Rebate program.
Now stick with me because this sounds like a lot of political and corporate mumbo jumbo, but it’s important.
At issue in the settlement was whether the EpiPen should be classified as a 1. generic or a 2. brand-name drug under the terms of Medicaid Drug Rebate program. This is key to determining how much a drugmaker pays to Medicaid to be included in the government-run health program.
Under the program, companies that sell generic drugs or products through Medicaid pay a 13 percent rebate to the agency. Alternatively, those who sell brand-name products are required to pay a rebate of at least 23.1 percent.
Back to Mylan’s case: A brand-name classification could have possibly resulted in an even higher percentage rebate because companies that hike a product’s price faster than the rate of inflation are required to pay an additional amount.
CNBC reported that Mylan might have shortchanged Medicaid by more than $700 million over a five-year period based on an estimate by a state Medicaid agency that the company was not paying states 85 percent of what it owes in EpiPen rebates.
Now I’m no Congresswoman or pharmaceutical tycoon, but those sound like pretty solid grounds for a hearing. So, back on Sept. 21, Mylan CEO Heather Bresch appeared before a Congressional committee to answer to… all of the above.
I love this part. During this hearing, Bresch repeatedly placed Mylan profits on the average $600 list-price EpiPen at only $50 per pen, after considering “various costs.” Right. CNBC reported those profits that Bresch cited – before Congress, mind you – were under the real value by at least 4 percent and up to 66 percent, “depending on how it’s calculated.”
In short, this whole Mylan EpiPen fiasco is a political and ethical mess.
Sen. Elizabeth Warren recently wrote,
“The Justice Department has rewarded Mylan by imposing a fine that is about $65 million less than the amount Mylan made by defrauding Medicare and Medicaid. In addition, you permitted Mylan to avoid admission of wrongdoing, collected no additional penalties under the False Claims Act, and blocked other actions against the company that would have required greater accountability.”
Alternatively, attorneys Ellyn Sternfield and Rodney Whitlock of Mintz Levin wrote:
“[The Justice Department] does not have the authority to settle states’ individual drug rebate claims against Mylan, which means any potential ‘global’ settlement with the states raises a variety of issues.”
To put the cherry on top of this allergy-friendly, overly priced sundae, in an interview with CNBC, Bresch said Mylan has spent hundreds of millions on product development. The funny part about that is the drug epinephrine has been around for a hundred years and costs, yep, $3. The auto-injector isn’t exactly made out of gold, either; it’s plastic.
EpiPens earned Mylan more than $1 billion a year. And if you haven’t yet already placed Heather Bresch’s mug on the body of Scrooge McDuck, she told Wall Street analysts, “I think you’ll see opportunities for us to continue to have that price per pen increase.”
If you or someone you provide for has food allergies and you need the EpiPen, check out GoodRx.com/epinephrine and discuss your options with your pharmacy/insurance carrier, cause we aren’t all diving into gold like Heather.