According to recent news reports, Department of Defense (DoD) spending on EpiPens has increased 553 percent in recent years, from $9 million in 2008 to $57 million in 2016; While the DoD gets a discount on EpiPens distributed at government facilities, it is not receiving discounts for EpiPens filled at retail pharmacies
In a letter to Secretaries Carter and McDonald, Klobuchar and Blumenthal request information to ensure federal government and taxpayers are not overcharged for prescription drugs and to recover overpayments made as a result of improper classifications
WASHINGTON, D.C. – U.S. Senators Amy Klobuchar (D-MN) and Richard Blumenthal (D-CT) today called on the Department of Defense (DoD) and the Department of Veterans Affairs (VA) to review the classification of Mylan’s EpiPen to determine whether the federal government is owed a rebate. According to recent news reports, DoD spending on EpiPens has increased 553 percent in recent years, from $9 million in 2008 to $57 million in 2016. While the DoD gets a discount on EpiPens distributed at government facilities, it does not receive discounts for EpiPens filled at retail pharmacies. In a letter to Secretaries Carter and McDonald, Klobuchar and Blumenthal requested information to ensure the federal government and taxpayers are not overcharged for prescription drugs and to recover overpayments made as a result of improper classifications.
“It was recently revealed that Mylan Pharmaceuticals misclassified its EpiPen, an epinephrine auto-injector used to treat severe allergic reactions, as a non-innovator multiple source drug under the Centers for Medicare and Medicaid Services’ Medicaid Drug Rebate Program. In light of this misclassification, we ask that VA immediately complete a review of EpiPen’s classification and determine whether the federal government is owed a rebate,” the lawmakers wrote. “We look forward to working with you to ensure that the federal government and taxpayers are not overcharged for prescription drugs for servicemembers and veterans, and to immediately recover overpayments made as the result of improper classifications.”
Klobuchar and Blumenthal were among the first Senators to respond to Mylan’s excessive prices increases for a drug to treat extreme, life-threatening allergic reactions. They have called for an investigation by the Federal Trade Commission, and hearings by the Senate Judiciary and Commerce Committees, on which they both sit.
In August, Klobuchar and Blumenthal wrote to CMS to call on the agency to provide information on the effect of Mylan’s price increases on government prescription drug costs, asking specifically why EpiPen was classified as a generic drug under the Medicaid Drug Rebate Program. Following these efforts, CMS found that Mylan had misclassified the EpiPen as a “Non-Innovator Multiple Source Drug,” or generic drug, resulting in overpayment for the drug by states and the federal government through the Medicaid Drug Rebate Program. Klobuchar, Blumenthal, and Senator Kirsten Gillibrand (D-NY) have also urged the Department of Health and Human Services to clarify the circumstances of the EpiPen misclassification.
In September, Klobuchar, Blumenthal, and Chuck Grassley (R-IA) called for DOJ to consider investigating whether Mylan Pharmaceuticals violated the law when it misclassified its EpiPen product in order to pay a lower rebate to states and reap huge profits at the expense of taxpayers.
Blumenthal and Klobuchar also joined Grassley and U.S. Senators 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 the lawmakers’ letter is below.
Dear Secretaries Carter and McDonald:
We are writing to request information regarding how the Department of Veterans Affairs (VA) determines whether a drug is on the VA Covered Drug List under 38 U.S. C. 8126, which Department of Defense (DoD) uses for the TRICARE Retail Refund Program. It was recently revealed that Mylan Pharmaceuticals misclassified its EpiPen, an epinephrine auto-injector used to treat severe allergic reactions, as a non-innovator multiple source drug under the Centers for Medicare and Medicaid Services’ Medicaid Drug Rebate Program. In light of this misclassification, we ask that VA immediately complete a review of EpiPen’s classification and determine whether the federal government is owed a rebate. Since acquiring the lifesaving drug in 2007, Mylan has raised the price of an EpiPen 2-Pak from $100 to approximately $600 today. This alarming price increase not only harms consumers who face high out of pocket costs, it has also increased the costs to the federal government.
According to recent news reports, DoD’s spending on EpiPens has increased 553 percent in recent years, from $9 million in 2008 to $57 million in 2016. While the DoD gets a discount on EpiPens distributed at government facilities, it has not been receiving discounts for EpiPens filled at retail pharmacies. Reports indicate that nearly half of DoD’s spending is at retail pharmacies where an EpiPen 2-Pak costs approximately $509, which is three times higher than the discounted rate available for purchases for use at Military Treatment Facilities. It appears that DoD has been unable to recoup the quarterly refunds that would be owed under the TRICARE Retail Refund Program established through 10 U.S.C. 1074g(f) because the EpiPen is not classified as a “Covered Drug” under 38 U.S.C. 8126. We want to better understand the impact of the increasing costs of EpiPen on the government’s prescription drug costs. Accordingly, we request the following information:
1. Reports indicate that EpiPen’s classification as a non-Covered Drug prevents the DoD from receiving mandated rebates for products purchased through its retail pharmacy network.
a. When did the DoD and VA first begin to purchase or reimburse for EpiPens?
b. If it is determined that the EpiPen should be reclassified, how much money have the DoD and VA lost in rebates as a result of EpiPen’s classification?
2. Please provide additional information about how VA determines whether a drug is a covered drug in order to comply with the Federal Ceiling Price requirements from P.L. 102-585. In addition, please include any correspondence VA has regarding EpiPen’s status on the Covered Drug list between September 2008 and October 2016.
a. What responsibility does a company like Mylan have in identifying the correct classification and how does VA ensure that information is correct for determining what is a covered drug?
b. What steps does VA take to determine if a drug is misclassified?
c. Between September 2008 and October 2016, how many times has VA reviewed or changed a previous determination? If there have been redeterminations, have VA and DoD recovered retroactively applied discounts? In what amount?
3. Are all DoD prescription drug discounts only applied to pharmaceuticals dispensed at Military Treatment Facilities and by mail order?
a. Does current law allow for DoD to negotiate price discounts at retail pharmacies?
b. What is the average price difference between the Federal Supply Schedule (FSS) price for EpiPens and what the DoD has paid for EpiPens at retail pharmacies?
Thank you for your attention in this important issue. We look forward to working with you to ensure that the federal government and taxpayers are not overcharged for prescription drugs for servicemembers and veterans, and to immediately recover overpayments made as the result of improper classifications.
###
