With U.S. Senator Chuck Grassley
Q: Why are you looking into the pricing practices of an FDA-approved product known as an EpiPen?
A: Like so much of my oversight work, the issue of exorbitant price increases for a key medicine came to me from Iowans. They wanted answers about the high prices they were paying for their children’s medicine to treat severe allergic reactions. The widely known auto-injector is called an EpiPen and requires a prescription. It is used to inject a life-saving dose of epinephrine to counter an allergic reaction. Dozens of Iowa families contacted my office, writing letters to note the financial hardship that the price hike was creating to keep this life-saving device on hand for their kids. Since 2007, the drug manufacturer has increased the price for a two-pack dose from $100 to $600. Considering many families stock EpiPens at home, in the car and at school -- and in some cases for more than one child in the family -- the huge price increase is creating a big time hardship in household budgets. What’s more, this is a recurring expense for families considering the medication has a one-year shelf life. Families at the mercy of the pharmaceutical company’s pricing decision rightfully want answers. As one Iowan wrote in her letter: “I will pay whatever it takes” to keep her son protected against his severe peanut allergy. Once I started looking into the price increases, I discovered even more troubling issues linked to the drug manufacturer’s pricing strategy. Keep in mind that the taxpaying public pays for a lion’s share of pharmaceuticals prescribed and dispensed to millions of patients though the Medicaid and Medicare programs, as well as millions more of our nation’s veterans and members of the military. This raises a red flag as to how Mylan’s price structure affects taxpayers and consumers, the federal government, state governments and insurers.
The deeper I probed, even more troubling questions kept cropping up. It turns out that Mylan, the drug manufacturer, reportedly classified EpiPen as a generic under the Medicaid Drug Rebate Program, rather than as a brand name drug. That misclassification cost taxpayers hundreds of millions of dollars because it allowed for the EpiPen to qualify for a 13 percent rebate rather than a more generous 23.1 percent rebate under Medicaid. According to the Centers for Medicare and Medicaid Services (CMS), taxpayers spent $797 million on EpiPens through Medicaid from 2011 to 2015. Medicare spent $335 million in that time period. What’s most troubling in all of this is that the federal government was told in March 2009 – more than seven years ago – that the EpiPen was misclassified as a generic, rather than a brand name drug. And yet, no apparent action was taken and taxpayers paid hundreds of millions of dollars more because of it. The American people deserve to know why their government apparently failed to act sooner rather than later and what justification Mylan used to launch such a massive price increase on consumers. I’ll continue to work to get answers.
Q: What steps have you taken to achieve accountability and transparency in this matter?
A: For the last several months, I have ramped up bipartisan oversight efforts to get answers from the executive branch. In August, I wrote a bipartisan inquiry to CMS asking for more information regarding EpiPen’s classification as a generic drug, and specifically, the impact on the taxpaying public. Once it came to light that the misclassification has cost taxpayers hundreds of millions of dollars, I followed up with the Department of Health and Human Services (HHS) to find out how in the world the drug was misclassified in the first place, let alone since 2007. In addition, I’ve called upon Mylan to reimburse the Department of Defense (DoD) for millions of dollars the DoD overpaid in taxpayer funds for the drug, up to three times the discounted price the DoD receives for drugs dispensed at military facilities. It appears that for nearly a decade, the DoD overpaid for EpiPens at its retail pharmacies due to the misclassification, costing taxpayers upwards of $50 million. Now, it’s even more important to find out if Mylan knowingly misclassified EpiPen to avoid larger rebate payments at the expense of our military families and taxpayers.
In another bipartisan letter, I wrote to the Federal Trade Commission (FTC) regarding reports that Mylan engaged in possible anti-competitive business behavior, including exclusive contracts with schools, possibly precluding competition in the drug market. I received affirmation from the FTC that stopping anti-competitive behavior within the pharmaceutical industry is a top priority.
Let’s be clear that the pharmaceutical industry operates in a complex regulatory structure to protect patient safety. Policymakers also must work to ensure that companies aren’t engaging in anti-competitive practices in violation of the anti-trust laws or the regulatory process. In our system of free enterprise, profit drives job creation, wage growth, innovation and economic activity. Competition is the magic sauce that can create the next blockbuster drug as well as reduce drug prices. That’s why I conduct robust oversight to keep the playing field level to foster healthy economic growth and competition in the marketplace. No matter which sector of the economy, from pharmaceuticals to agriculture, it’s essential to keep competition fair and square and hold to account those who don’t play by the rules. It’s just as important to make sure the government faithfully enforces the law on behalf of the American people. With high drug prices on the minds of so many Americans, it’s imperative that we foster competition to keep prices down and quality and innovation up.
In addition to my tireless oversight work, I’m pushing legislative solutions that would push back against anti-competitive behavior to strengthen competition and hold down drug costs. The bipartisan bills I’m working on would help bring more generic drugs to market for consumer benefit. They are the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act and the Preserve Access to Affordable Generics Act.