CMS: Mylan overcharged government for EpiPens for years

The controversy over the price increases for EpiPens isn’t going away, as Mylan is now being accused by CMS of overcharging Medicare and Medicaid by classifying the autoinjector as a generic drug.

In a letter to U.S. Sen. Ron Wyden, D-Oregon, the ranking Democrat on the Senate Finance Committee, CMS said Medicaid and Medicare spending on the allergic reaction medication increased 463 percent between 2011 and 2015 to $487 million, before accounting for any rebates. In that five-year span, the programs spent a total of $1.2 billion on EpiPens.

How the drug was classified may be responsible for some of the financial figures. The CMS letter said EpiPens had been wrongly classified as a generic medication, despite meeting the definition of “a single source drug or brand drug.”

“This incorrect classification has financial consequences for the amount that federal and state governments spend because it reduces the amount of quarterly rebates Mylan owes for EpiPen,” CMS wrote to Wyden. “As you indicated in your letter, under the Medicaid Drug Rebate Program, single source or brand drugs pay a rebate of the greater of 23 .1 percent of average manufacturer price (AMP) or the difference between AMP and the drug's best price, increased by an additional rebate if the AMP of the drug increased faster than the rate of inflation. In contrast, the rebate for generic products is 13 percent of AMP.”

CMS said it can’t comment on how much Mylan may owe thanks to this incorrect classification, but asserted it has informed the company of the problem many times.

However, EpiPens have been classified as a generic since at least 1997, predating Mylan’s acquisition of the product.

“Mylan simply continued to classify the product the same way it had been classified before Mylan acquired the product,” company spokesperson Nina Devlin said to Bloomberg.

CMS didn’t address why it hasn’t taken legal action against Mylan for the alleged misclassification, which could subject the company to liability under the False Claims Act.

A press release from Wyden said it’s up to the manufacturers to ensure their products are classified correctly and promised to review whether CMS has “sufficient authority and resources” to judge drug classification.