Chuck Grassley

United States Senator from Iowa

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Grassley Presses EpiPen Maker, Federal Agency on Medicaid Classification

Oct 04, 2016

WASHINGTON – Sen. Chuck Grassley of Iowa is pressing the company that makes EpiPens and the federal agency that oversees Medicaid on whether the company over-charged states by misclassifying its product and for communications between Mylan and the Centers for Medicare and Medicaid Services regarding the EpiPen’s apparent misclassification.  
 
“It’s important for companies that participate in public health care programs to follow the letter and the spirit of the law,” Grassley said.  “It’s equally important for federal agencies to make sure no companies are allowed to game the system.  Otherwise, patients and taxpayers lose out.  I plan to keep asking questions until we get to the bottom of what happened here.” 
 
Grassley wrote to the Centers for Medicare and Medicaid Services, seeking all documentation of warnings the agency said it gave to the company about misclassifying EpiPens under Medicaid’s Drug Rebate Program.  The agency, according to news reports, said it told the company “on multiple occasions” that its classification was wrong.  Mylan has been paying a 13 percent rebate under Medicaid, considering the product a non-innovator multiple source drug, or generic drug, instead of a 23.1 percent rebate, which applies to innovator drugs. In general, civil monetary penalties for misclassification apply.  
 
“It would be helpful for Congress and the American public to understand what steps, if any, the Obama Administration has taken under its authorities to ensure companies are not gaming the system and are appropriately held accountable for misclassifying their products,” Grassley wrote in asking a series of questions of Administrator Andrew Slavitt.
 
Grassley also wrote to the head of Mylan with questions about whether the company was notified about the misclassification and if so, when and how, and pressed for documentation.  Grassley noted that staff asked Mylan representatives about the misclassification issue at a briefing on Sept. 14, and the representatives did not answer the questions.   Given the agency’s statements about advising Mylan about the misclassification, “it is imperative that Mylan provide all documents relating to those communications so that the Committee can better understand Mylan’s decision-making process with respect to classifying the EpiPen,” Grassley wrote to Heather Bresch, chief executive officer.
 
Grassley also asked Mylan other open questions resulting from the staff briefing and the company’s Sept. 8 response to Grassley’s Aug. 22 letter, including a clear accounting of what goes into the product’s $608 cost and the basis for which Mylan is seeking classification of the EpiPen as a preventive drug to increase health insurance coverage of the item.
 
Earlier, Grassley was one of three senators who wrote to the Justice Department to ask whether the agency is considering an investigation of whether Mylan overcharged the states on EpiPens.  He asked the Iowa attorney general to review whether Iowa taxpayers were overcharged, and the attorney general told Grassley he’s looking into it. The amount paid for EpiPens by the state of Iowa has increased by more than 45 percent each year for the past three and a half years. It is not clear how the Medicaid rebate contributed to this escalating cost.
 
Grassley’s letters are available here and here