Is EpiPen Ripping Off the Medicaid Rebate Program?


There’s no escaping Mylan’s EpiPen these days, whether it’s congressional hearings looking into the drug’s dramatic price hike or the CEO’s $18 million salary. Adding to all this are two recent congressional letters that speculate that Mylan may not have been paying its fair share under the Medicaid drug rebate program.

House Energy and Commerce Republicans sent a letter to the HHS Office of Inspector General Sept. 12 calling for a review of CMS oversight of the Medicaid drug rebate program, specifically EpiPen’s drug classification under the program. Because EpiPen is classified as a generic, Mylan pays a 13 percent rebate, whereas it would pay a 23.1 percent rate if classified as a brand-name drug. Classifying EpiPen as a generic may have resulted in extra spending by state Medicaid programs, because Mylan paid a lower Medicaid rebate than it would have for a brand-name drug.

The House letter was followed by a nearly identical letter from Senate Republicans on the Finance Committee, and Linda Baumann, an attorney with Arent Fox, told me that it’s a serious problem when two congressional committees are concerned over CMS activities. Baumann said the letters are consistent with overall concerns over prescription drug price increases.

Medicaid spent $42.7 billion on generic and brand name drugs in fiscal year 2014, according to the Senate letter, and received $19.9 billion in rebates. The Senate letter included mention of a Sept. 8 memo from the National Association of Medicaid Directors that said that if EpiPen is considered a generic drug for the Medicaid rebate program, but is not a true generic, then it would be a case of taking advantage of the program.

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