Following Klobuchar and Blumenthal’s August 30^th inquiry to the Centers for Medicare and Medicaid Services, the agency revealed that Mylan had incorrectly classified EpiPen as a generic drug under the Medicaid Drug Rebate Program; This classification has a significant impact on the cost of EpiPens to states and the federal government through Medicaid

In a letter to the Department of Health and Human Services (HHS), Klobuchar, Blumenthal, and Gillibrand called on the agency to clarify the circumstances of the EpiPen misclassification and to determine if other drugs have also been misclassified under the Medicaid Drug Rebate Program; Klobuchar, Blumenthal, and Gillibrand also pushed for a nationwide investigation to determine how much the misclassification of EpiPen has cost states and the federal government

WASHINGTON, DC – U.S. Senators Amy Klobuchar (D-MN), Richard Blumenthal (D-CT), and Kirsten Gillibrand (D-NY) today urged the Department of Health and Human Services (HHS) to clarify the circumstances of the EpiPen misclassification. Following Klobuchar and Blumenthal’s August 30^th inquiry to the Centers for Medicare and Medicaid Services (CMS), the agency revealed that Mylan had incorrectly classified EpiPen as a generic drug under the Medicaid Drug Rebate Program. This classification has a significant impact on the cost of EpiPens to states and the federal government through Medicaid. In a letter to HHS sent today, Klobuchar, Blumenthal, and Gillibrand called on the agency to clarify the circumstances of the EpiPen misclassification and to determine if other drugs have also been misclassified under the Medicaid Drug Rebate Program. Klobuchar, Blumenthal, and Gillibrand also pushed for a nationwide investigation to determine how much the misclassification of EpiPen has cost states and the federal government.

“Following an August 30 inquiry to the Centers for Medicare and Medicaid Services (CMS), the agency has informed us that Mylan incorrectly classified EpiPen as a non-innovator multiple source drug under the Medicaid Drug Rebate Program. This classification has a significant impact on the cost of EpiPens to states and the federal government through Medicaid,” the lawmakers wrote. “This misclassification is particularly costly for states like Minnesota, Connecticut and New York that have experienced record high Medicaid enrollment thanks to increased access to health care. This is a burden not only to state and federal governments, but ultimately, to taxpayers. We write you today to clarify the circumstances of the EpiPen misclassification and to determine if other drugs have also been misclassified under the Medicaid Drug Rebate Program.” 

Last month, Klobuchar, the Ranking Member of the Antitrust Subcommittee of the Senate Judiciary Committee, called for the FTC to investigate Mylan Pharmaceuticals for possible antitrust violation. Klobuchar has also called for the Senate Judiciary Committee to hold a hearing to investigate the enormous increase in the price of EpiPens.

In August, Blumenthal demanded that Mylan lower the price of the EpiPens to an affordable, accessible level. He also joined Connecticut mothers, nurses and doctors to call on Mylan to end the unconscionable price gouging that is threatening to put the life-saving product out of reach for families, schools and first responders.

Klobuchar and Blumenthal joined U.S. Senators Chuck Grassley (R-IA), Patrick Leahy (D-VT), and Ron Johnson (R-WI) in asking the Food and Drug Administration (FDA) to answer questions about its approval process and other steps for alternatives to the EpiPen.

The full text of Klobuchar, Blumenthal, and Gillibrand’s letter is below.

The Honorable Sylvia Mathews Burwell

Secretary

Department of Health and Human Services

200 Independence Avenue, SW

Washington, DC 20201

Dear Secretary Burwell:

Following an August 30 inquiry to the Centers for Medicare and Medicaid Services (CMS), the agency has informed us that Mylan incorrectly classified EpiPen as a non-innovator multiple source drug under the Medicaid Drug Rebate Program. This classification has a significant impact on the cost of EpiPens to states and the federal government through Medicaid. As a result of the non-innovator classification, states only receive a 13 percent rebate of the Average Manufacturer Price (AMP) per unit. If EpiPens were considered an innovator multiple source drug, states would receive the greater of 23.1 percent of AMP or the difference between AMP and the best price per unit as adjusted by the Consumer Price Index for All Urban Consumers (CPI-U). The Minnesota Department of Human Services estimates this misclassification will result in the state overpaying an estimated $4.3 million this year alone. That figure is just for one state, for one year, for one drug. This misclassification is particularly costly for states like Minnesota, Connecticut and New York that have experienced record high Medicaid enrollment thanks to increased access to health care. In fact, last year, over 750,000 people in Connecticut – 20 percent of the population – were covered by Medicaid. This is a burden not only to state and federal governments, but ultimately, to taxpayers. We write you today to clarify the circumstances of the EpiPen misclassification and to determine if other drugs have also been misclassified under the Medicaid Drug Rebate Program. 

This issue affects all states, not just Minnesota, Connecticut and New York. It is important to us to understand how the issue developed, whether it is limited to EpiPen, and how to best solve the problem. We urge you to conduct a nationwide investigation to determine how much the misclassification of EpiPen has cost states and the federal government and what other drugs are misclassified. We respectfully request the following information:

1.                  On September 1, CMS stated that Mylan misclassified EpiPen as a non-innovator multiple source drug.

a.      When did Mylan make this misclassification? Has the product ever had different classification?

b.      What is the correct classification for EpiPen and why?

c.       When did CMS become aware of the misclassification and when did CMS notify Mylan of the misclassification?

2.                  Please explain the process for classifying drugs for the Medicaid Drug Rebate Program.

a.      What responsibility does a company like Mylan have in identifying the correct classification and how does the company certify the classification?

b.      What authority does CMS have to review, question, or deny a classification?

c.       Who is responsible for adjusting the classification if circumstances change or if the drug is misclassified?

3.                  According to the Department of Justice (https://www.justice.gov/opa/pr/four-pharmaceutical-companies-pay-124-million-submission-false-claims-medicaid), in 2009 Mylan agreed to pay $118 million “to resolve allegations that it had sold innovator drugs that were manufactured by other companies and had classified those drugs as non-innovator drugs for Medicaid rebate purposes.”

a.      What authority does the U.S. Department of Health and Human Services have to recover the correct amount of rebates that should have been made to states for misclassified drugs?

b.      What penalties does a company face for wrongly classifying a drug?

4.                  In May 2016 you released guidance directing manufacturers to apply for an exception if they received approval for a New Drug Application (NDA) from the Food and Drug Administration but believe the product should qualify as a non-innovator multiple source drug for the Medicaid Drug Rebate Program.

a.      Would EpiPen fall within this exception? Why or why not?

5.                  How significant is the issue of misclassified drugs?

a.      Is CMS currently reviewing whether other drugs are misclassified?

b.      Please identify all drugs marketed under an NDA that are misclassified as a non-innovator, multiple source drug and the time period that each of these drugs have had this designation. 

6.                  The Minnesota Department of Human Services estimates it will overpay Mylan $4.3 million in 2016 due to EpiPen’s misclassification as a non-innovator, multiple source drug.

a.      What is the estimated cost of this misclassification to all states and the federal government in 2016?

b.      What is the estimated cost of this misclassification to all states and the federal government since Mylan acquired the drug in 2007?

c.       What is the estimated cost of all misclassified drugs, on an annual and total basis, for the previous 10 years?

Thank you for your attention in this important issue. We look forward to working with you to ensure that states, the federal government, and taxpayers are not overcharged for prescription drugs.

Sincerely, 

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