Mylan Pharmaceuticals, the maker of EpiPens for allergy sufferers, may have overcharged taxpayers as much as $1.27 billion by misclassifying their life-saving devices under Medicaid’s drug rebate program from 2006 to 2016, a government watchdog has informed Sen. Charles E. Grassley of Iowa.
The amount detailed by the Health and Human Services Department’s inspector general is nearly three times the amount that Mylan acknowledged in negotiations with the Justice Department, which sought a settlement last year amid congressional uproar over the Pennsylvania-based drugmaker’s decision to hike the price of its twin-pack of EpiPens.
Mr. Grassley, a Republican and chairman of the Senate Judiciary Committee, said Mylan short-changed taxpayers by classifying its popular EpiPen as a generic instead of a brand-name product — a move that allowed it to pay smaller rebates to states under Medicaid, the government insurance program for the poor.
Manufacturers pay states a 23.1 percent rebate on brand-name drugs compared to 13 percent for generics.
Mr. Grassley said it was alarming that taxpayers were nearly cheated out of hundreds of millions.
“The fact that the EpiPen overpayment is so much more than anyone discussed publicly should worry every taxpayer. Mylan and the Obama administration reportedly were close to settling the overpayment for much less than $1.27 billion,” he said.
The senator faulted both the drug company and the Centers for Medicare and Medicaid Services under President Obama for failing to address the issue.
“It looks like Mylan overcharged the taxpayers for years with the knowledge EpiPen was misclassified, and the previous administration was willing to let the company off the hook,” he said.
The revelation comes several months after Congress lit into Mylan for raising the price of its EpiPen packs from $100 in 2009 to more than $600 last year.
Many parents and schools buy up the epinephrine injectors each fall to make sure children can stave off anaphylactic shock, so lawmakers took notice last fall.
The wave of scrutiny, including a Senate probe and House hearings, paved the way last year for a half-price generic version of the pens and a settlement valued at $465 million.
The Justice Department and Mylan never sealed the deal, however, and Mr. Grassley said he will keep digging until the parties arrive at the right amount.
“Taxpayers have a right to know what happened here and to be repaid whatever they are owed,” he said.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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