WASHINGTON – Sen. Chuck Grassley, Chairman of the Judiciary Committee, today sought records from the Office of Inspector, U.S. Department of Health and Human Services, over the identification in 2009 of EpiPen’s misclassification that led to significant overcharging of the taxpayers.  The inspector general also is invited to testify at the Judiciary Committee hearing scheduled for Nov. 30 on the EpiPen misclassification and the potential settlement with the Department of Justice for the overcharges.  The Office of Inspector General told Grassley staff that the office notified the Centers for Medicare and Medicaid Services (CMS) in 2009 that the EpiPen was misclassified under the Medicaid Drug Rebate Program, meaning the taxpayers overpaid for the product.
“The taxpayers deserve answers on what happened between 2009 and now,” Grassley said.  “It appears the EpiPen was misclassified for years, and CMS was notified of the problem.  If no one did anything about the misclassification, why not?  This could mean hundreds of millions of dollars in taxpayer over-payments occurred without justification.”
Grassley said his staff communicated with the Office of Inspector General regarding an inspector general report from July 2009 entitled “Accuracy of Drug Categorizations for Medicaid Rebates.”  The report noted that eight drugs were misclassified.  The drugs are unnamed in the report.  Office of Inspector General staff confirmed to Grassley staff that one of the eight items was the EpiPen and that the office reported the misclassification to CMS in 2009.
“My staff requested a briefing as well as records pertaining to the notice of misclassification to CMS and were informed it would require a formal letter from the Chairman,” Grassley wrote to Inspector General Daniel R. Levinson.  “Accordingly, please provide all records relating to the Health and Human Services Inspector General notifying CMS of the EpiPen’s misclassification.”
The EpiPen has been classified as a generic drug rather than a name brand drug in the Medicaid Drug Rebate Program.  The generic classifications leads to a lower rebate paid to Medicaid.  CMS has acknowledged that EpiPens have been misclassified.  Last month, the EpiPen maker Mylan announced a $465 million settlement with the Justice Department over the misclassification.  However, the Justice Department has said only that there is no executed settlement.  Under some calculations, the amount of overpayments by the taxpayers could be significantly higher than $465 million.   It’s also not clear whether the reported settlement amount contains all potential damages to be assessed by the Justice Department, including potential actions under the False Claims Act that could result in treble damages paid to the taxpayers.  

The Judiciary Committee has scheduled a hearing for Nov. 30 to discuss the settlement and the misclassification.  Grassley invited Levinson to testify. Other invited witnesses are from CMS, the Justice Department and Mylan.  
Grassley’s letter today is available here.