Op-Ed: Mylan's $465 million EpiPen settlement to Medicaid is laughable

Posted Oct 9, 2016 by Karen Graham
Drug-maker Mylan has agreed to pay $465 million to settle allegations that it over-billed Medicaid for its life-saving EpiPen, all without their admitting any guilt, and closing the book on a federal investigation.
Mylan CEO Heather Bresch getting raked over the coals by the House Oversight committee.
Mylan CEO Heather Bresch getting raked over the coals by the House Oversight committee.
This latest revelation is only a small part of the tempest that has surrounded the company's EpiPen since it started overcharging Americans hundreds of millions of dollars since at least 2011 for the device, reports the Consumerist.
At the center of the Medicaid settlement was the allegation that Mylan had only reimbursed the program for the EpiPens as a generic drug, which meant that Mylan's mandatory rebate to the program was 10 percent less than what was required by law.
Basically, drug manufacturers whose medications are purchased by Medicaid reimburse the program through mandatory rebates. The rebates are divided into two classes. Branded or newer drugs, those with little or no competition, have a significantly higher rebate, of at least 23.1 percent.
On the other hand, generic or what some call “non-innovator multiple source” drugs (NIMS) have a rebate rate of 13 percent of the manufacturer's price during the rebate period. NIMS drugs include older drugs on the market that also have a generic version available.
Of course, everyone now knows that Mylan had the market tied up with its "branded" EpiPen, and there is no other similar product available. But here is where the allegations come into play. Mylan is accused of knowingly misclassifying the EpiPen as a NIMS drug in order to pay the lower rebate price.
Interestingly, and then again it is certainly questionable, it was only after members of Congress grilled the Centers for Medicare & Medicaid that anything was done about the overlooked discrepancy, resulting in the announcement of the settlement by Mylan.
The gigantic white elephant in the middle of the room is the knowledge that since 2011, when Mylan started raising the price of EpiPen, Medicaid has purchased over $1.0 billion worth of them. The settlement agreed to by Mylan doesn't begin to cover what Medicaid should be reimbursed, and that has become a red-hot question.
Andrew Slavitt, Acting Administrator for the Center for Medicare & Medicaid Services (CMS), confirmed to Sen. Ron Wyden (OR) in a letter that Mylan had indeed been only paying 13 percent, however, CMS has not yet determined how much the drug company really owed to Medicaid. So the big question is this: Who made the determination that $465 million was a satisfactory amount?
No wonder Mylan didn't contest the settlement. It's laughable, to say the least. They came out of this mess smelling like a rose.