Taxpayers May Have Overpaid for EpiPens by a Billion Dollars

Grassley releases letter from HHS inspector general

Senate Judiciary Chairman Charles E. Grassley is continuing to investigate EpiPen pricing. (Bill Clark/CQ Roll Call file photo)
Senate Judiciary Chairman Charles E. Grassley is continuing to investigate EpiPen pricing. (Bill Clark/CQ Roll Call file photo)
Posted May 31, 2017 at 6:42pm

The federal government may have overpaid for EpiPens by more than a billion dollars over a decade.

That’s according to materials provided to Senate Judiciary Chairman Charles E. Grassley by the office of the inspector general at the Health and Human Services Department about the medical device by Mylan Pharmaceuticals, used to treat severe allergic reactions.

“The fact that the EpiPen overpayment is so much more than anyone discussed publicly should worry every taxpayer,” Grassley said in a statement. 

A Wednesday letter to the Iowa Republican from the inspector general’s office said it was possible that the overpayment could reach $1.27 billion, rather than the $465 million that the manufacturer had apparently agreed to pay.

“Mylan and the Obama Administration reportedly were close to settling the overpayment for much less than $1.27 billion,” Grassley said. 

The underlying issue is in how to calculate the rebates that manufacturers like Mylan Pharmaceuticals pay to help offset the costs incurred by states and the federal government when dispensing their prescriptions under Medicaid.

“Mylan has historically classified EpiPen as a generic for purposes of the Medicaid Drug Rebate Program. Therefore, the rebates that Mylan paid for EpiPen were based on a percentage of [Average Manufacturer Price],” the HHS inspector general’s office told Grassley. “In contrast, if Mylan had classified EpiPen as a brand-name product, it should have calculated rebates based on a higher percentage of AMP or the difference between AMP and Best Price.”

Grassley said that records provided to his committee by the Centers for Medicare and Medicaid Services “showed Mylan was made aware of the misclassification years ago but did nothing.”

Still, Wednesday’s letter, signed by Christopher Seagle, the director of external affairs at the inspector general’s office, indicated that its analysis has significant limitations.

“OIG did not determine whether Mylan’s classification of EpiPen under the Medicaid Drug Rebate Program was actually correct nor did we determine the amount of rebates, if any, the Federal Government should seek to recover from Mylan now,” Seagle said in the letter.

Nevertheless, the analysis by the inspector general could increase pressure on Mylan and return attention to last year’s EpiPen crisis, when the price of the drug skyrocketed. And even some members of Congress were hit close to home by the scandal because of family members who rely on access to the injectable drug.

As that debate played out last August, efforts by Mylan to reduce the price of the EpiPens for some consumers were dismissed by some in Congress as a public relations move.