EpiPen maker Mylan notified the Senate Judiciary Committee that it would not testify at a scheduled hearing Wednesday on a controversial $465-million settlement it reached with U.S. officials in October, resolving allegations that it cheated the Medicaid rebate program for years.
Committee Chairman Senator Chuck Grassley called for the Nov. 30 hearing to review the settlement, “Oversight of the EpiPen Crisis Settlement: Where is the Federal Government Looking out for Taxpayers and Patients.”
Like many other officials, Sen. Grassley has criticized the agreement as a sweetheart deal that lets Mylan off the hook too easily for years of alleged Medicaid fraud.
The U.S. Department of Justice and the Centers for Medicare and Medicaid Services accused Mylan of misclassifying its EpiPen as a generic drug instead of a branded drug under the Medicaid rebate program, which allowed it to reimburse the federal and state Medicaid programs for significantly less.
The law requires pharmaceutical companies to pay Medicaid rebates of 13 percent for generic drugs and at least 23.1 percent for branded drugs, which cost much substantially more than generics.
Analysts estimate that Mylan’s scheme cost the Medicare program more than $700 million over much of the past decade. Accompanying the alleged rebate scam were several drastic price increases for the EpiPen, which cost less than $100 for a pair nine years ago but now cost more than $600.
These price increases allowed Mylan to collect substantially more from Medicaid and Medicare. The amount Medicare and Medicaid spent on EpiPens rose to $486.8 million in 2015 from $86.5 million in 2011, a jump of 463 percent – a fivefold increase.
Earlier this month, the U.S. Justice Department and Centers for Medicare and Medicaid Services notified the Senate Judiciary Committee that they would not participate in the Mylan settlement hearing, citing procedures involving “pending matters and investigation.”
Mylan announced the settlement in an Oct. 7 press release, but the Justice Department has not confirmed the details and has said there is no executed settlement, further drawing Sen. Grassley’s ire.
“If Mylan’s purpose of the press release was to increase stock prices at the risk of misleading investors, it is exactly this set of facts and circumstances that the [Securities and Exchange Commission] SEC should monitor,” Sen. Grassley said. “Companies cannot be allowed to manipulate the markets and investors via press releases.”
Law 360 notes that Mylan is already under investigation by the SEC, and Mylan investors have filed a securities class-action against that company.