The Centers for Medicare and Medicaid Services (CMS), in response to a request from U.S. Senator Amy Klobuchar of Minnesota, said in a letter that Medicare and Medicaid spending on the EpiPen epinephrine autoinjector (Mylan Pharmaceuticals) increased from $86 million in 2011 to $487 million in 2015, or 463%, not accounting for Medicaid or Medicare rebates or other post point-of-sale concessions.
Total Medicaid spending on the EpiPen during this period was $960 million, increasing from $66 million in 2011 to $365 million in 2015. After rebates, net Medicaid spending was approximately $797 million.
Between 2011 and 2015, total Medicare spending on the EpiPen was $335 million, increasing from $20 million in 2011 to more than $121 million in 2015. Again, these costs do not reflect manufacturer rebates or other post point-of-sale price concessions.
Klobuchar and other lawmakers contend that Mylan underpaid rebates to state Medicaid programs by misclassifying the EpiPen as a generic product instead of a branded drug. The Medicaid rebate for a generic is 13% compared with a minimum 23.1% for a brand-name medication.
The CMS agreed with the lawmakers’ contention. In his letter, acting administrator Andy M. Slavitt said that a review of the agency’s records indicated that, before 1997, the EpiPen was reported as a single-source, or brand, drug for the Medicaid Drug Rebate Program. But since the fourth quarter of 1997, the EpiPen has been reported as a non-innovator multiple source, or generic, drug.
“EpiPen is approved under a New Drug Application (NDA) by the Food and Drug Administration (FDA), has patent protection, and has no FDA-approved therapeutic equivalents. These facts indicate EpiPen does not meet the definition of a multiple source drug, but, in fact, meets the definition of a single source drug or brand drug,” Slavitt wrote.
He added that the CMS’ Center for Medicaid and CHIP Services has, on numerous occasions, provided guidance to Mylan on the proper classification of drugs and has expressly told the company that the EpiPen is incorrectly classified.
“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,” Slavitt wrote.
In a statement, Klobuchar called for “clear answers on how deep this misclassification goes, how much it has cost taxpayers across the country, how many other drugs may be misclassified, and how we get that money back.”
Mylan chief executive Heather Bresch was slammed by lawmakers during a congressional hearing last month for raising the list price for a pair of EpiPens to more than $600 this year. A twin pack of EpiPens cost approximately $100 in 2007, when Mylan acquired the product.