Finance Republicans Call for Review of Rebate Practices for Mylan’s EpiPen

In Letter to HHS IG, Senators Express Concern over Reports of Potential Rebate Manipulation

 

WASHINGTON, September 20, 2016 – In a letter today, Senate Finance Committee Republicans requested a review of the Centers for Medicare & Medicaid Services’ (CMS) administration and oversight of the Medicaid Drug Rebate Program (MDRP) regarding Mylan’s EpiPen.  The letter, led by Chairman Orrin Hatch (R-Utah), was sent to Department of Health and Human Services (HHS) Inspector General (IG) Daniel R. Levinson.

“Manufacturer rebates play an important role in helping to offset the ever-increasing costs of prescription drug to the Medicaid program. The recent controversy surrounding Mylan’s prescription drug product EpiPen® raises questions about the controls in place to ensure that drug manufacturers are paying appropriate rebates,” the Senators wrote. “A thorough and timely review of these issues by the Office of the Inspector General will provide important information to Congress about how CMS is overseeing this significant part of the Medicaid program and where changes in policy need to be made to protect the program against these types of vulnerabilities in the future.”

The letter was signed by Senate Finance Committee Chairman Orrin Hatch (Utah) and Senators Chuck Grassley (Iowa), Mike Crapo (Idaho), Pat Roberts (Kan.), Mike Enzi (Wyo.), John Cornyn (Texas), John Thune (S.D.), Richard Burr (N.C.), Johnny Isakson (Ga.), Rob Portman (Ohio), Patrick Toomey (Pa.), Dan Coats (Ind.), Dean Heller (Nev.) and Tim Scott (S.C.).

The text of the letter is below:

The Honorable Daniel R. Levinson

Inspector General

U.S. Department of Health and Human Services

Office of the Inspector General

330 Independence Avenue SW

Washington, DC 20201

 Dear Inspector General Levinson:

As Members of the Senate Finance Committee (Committee), we have a responsibility to ensure the effectiveness and solvency of the Medicaid program. 

To that end, we, along with numerous of our colleagues in the Senate and House of Representatives, are concerned with recent reports about the potential manipulation of the Medicaid Drug Rebate Program (MDRP) and whether or not the Centers for Medicare & Medicaid Services (CMS) is conducting sufficient oversight on this issue.

The Medicaid program spent $42.7 billion in brand and generic drugs and received $19.9 million in manufacturer rebates in fiscal year 2014.[1] Manufacturer rebates play an important role in helping to offset the ever-increasing costs of prescription drug to the Medicaid program. 

The recent controversy surrounding Mylan’s prescription drug product EpiPen® raises questions about the controls in place to ensure that drug manufacturers are paying appropriate rebates. The categorization of prescription drugs as generics instead of branded drugs has real financial impacts on the MDRP.  

The National Association of Medicaid Directors (NAMD) recently raised their concerns on this issue in a memo to Congress where they wrote, “if EpiPen is considered a generic for Medicaid rebate purposes but is not an actual generic product, it appears Mylan is taking advantage of the MDRP.”[2]  NAMD went on to state that “[t]he classification of EpiPen (both the device and the drug administered through it) as a generic drug under the MDRP means the inflation protections applicable to brand drugs have not protected Medicaid programs from Mylan’s price increases over the years, and Medicaid programs have been subjected to the same increases in Average Wholesale Price (AWP) as commercial insurers and consumers.”[3]

The MDRP ensures that pharmaceutical manufacturers pay states a rebate off of the AMP. The percentage pharmaceutical manufacturers pay Medicaid is higher for brand drugs (23.1 percent) compared to generic drugs (13 percent), thus, Medicaid receives a lower rebate for drugs inappropriately categorized as generics.

Additionally, the MDRP has helped limit the effect of sharp increases in the prices of brand drugs on Medicaid for years by requiring pharmaceutical manufacturers to pay additional rebates if the costs of the brand drugs rises more than inflation. 

No such provision existed for generic drugs prior to the 2015 Bipartisan Budget Act.[4] As a result, misclassifying a brand drug as a generic insulated the manufacturer from paying Medicaid additional rebates when it increased the price of drugs. Finally, another provision in the MDRP requires manufacturers to offer state Medicaid programs the lowest price it offers to other payers, with some exceptions.

Pharmaceutical manufacturers, including Mylan, have previously been subject to enforcement action for misclassifying brand drugs as generic drugs. Mylan was one of four companies that in October 2009 entered into settlement agreements for a total of $124 million to resolve claims that they violated the False Claims Act by failing to pay appropriate rebates to state Medicaid programs for drugs paid for by those programs.[5]

Given the concerns raised by NAMD and the past behavior in this area, we are concerned that the controls in place, if any, are inadequate to ensure that Medicaid is receiving the full amount of rebates afforded to it by law. 

Therefore, we write to you today to join our Republican colleagues from the House Energy & Commerce Committee in their September 12, 2016, request that the Office of the Inspector General examine CMS’s oversight of the MDRP.

The Medicaid program is a vital part of our healthcare system and its financial viability is a critical area of concern for this Committee. 

A thorough and timely review of these issues by the Office of the Inspector General will provide important information to Congress about how CMS is overseeing this significant part of the Medicaid program and where changes in policy need to be made to protect the program against these types of vulnerabilities in the future. 

Grassley Seeks to Determine Whether Iowa Taxpayers Overpaid for EpiPens Under Medicaid

WASHINGTON, September 12, 2016 – Sen. Chuck Grassley has asked the Iowa attorney general to review whether Iowa taxpayers have overpaid for EpiPens under Medicaid.  

It appears Minnesota taxpayers may have overpaid for EpiPens by more than $4 million in a single year because the product might have been misclassified under a rebate program. Grassley is concerned about whether Iowans also overpaid. 

“If Minnesota has been potentially overcharged to the tune of $4 million, so too could Iowa. And if that is the case, the people of Iowa ought to be reimbursed for the overcharge,” Grassley wrote to Iowa Attorney General Tom Miller.  “It goes without question that the people of Iowa work very hard for their money, which is why I have committed to intense oversight of not just the federal government and its spending habits, but oversight of private companies that profit handsomely off federal and state government programs supported by Iowans’ taxpayer dollars.  …

“Iowans are rightly concerned about the high price of EpiPens. Accordingly, I urge you to review whether the state of Iowa and the people of Iowa have been overcharged by the potential misclassification of Mylan’s EpiPen as a generic drug. Please advise on what steps you are taking, or intend to take, on whether Iowa was overcharged, and if so, by how much.”

Grassley said it also would be helpful to know how much the state of Iowa has spent on EpiPens in the past five years.  Grassley said he would appreciate a response by Sept. 20.

Grassley said that under the Medicaid drug rebate program, branded drugs and authorized generic drugs carry a higher rebate than generic drugs.  If Mylan’s EpiPen was classified as a generic drug, the company would have paid the lower rebate, perhaps incorrectly, causing states to pay more. Grassley is interested in whether an incorrect classification involving EpiPens has bearing for other companies and drugs in the rebate program and if so, whether adequate oversight of the program exists.

“This information will be helpful as Congress works to understand whether the generic drug classification system is working as intended and whether drug companies and the Centers for Medicare and Medicaid Services are fulfilling their responsibilities under the program,” Grassley wrote.

Grassley wrote that the Minnesota attorney general opened an inquiry into the EpiPen pricing and the effects on the people of Minnesota, including through the school system. 

Grassley began his inquiry on the high cost of EpiPens on Aug. 22, when he wrote to the manufacturer of the EpiPen, used for emergency treatment for life-threatening allergic reactions, seeking an explanation of the steep price increase in the product in recent years.  Grassley’s letter came after Iowans expressed concern to him about the prices.  

Grassley then led a letter from five senators to the Food and Drug Administration, seeking details on whether alternatives to the EpiPen are in the works.  He also was one of three senators who asked the Centers for Medicare and Medicaid Services regarding the effects of the price increases on public health care programs.  

The company has since announced expanded patient assistance programs and a generic version of the product.

Candidate call for temporary importation of meds proves FDA can and should work to review personally imported brand-name prescriptions from Tier One Countries

ST. LOUIS, MISSOURI, USA, September 7, 2016 /EINPresswire.com/ -- The publisher of RxforAmericanHealth says Hillary Clinton’s plans to lower prescription prices proves that the Food and Drug Administration, Pharma and Pharma supporters have misled the American Public about the ability to ascertain authenticity and safety of personally imported medicines!

Daniel Hines notes that Ms. Clinton’s plan calls for importing medicines when drug prices are ‘threatening’ the health of Americans because the drugs are unaffordable.

“This should be extended to unaffordable ‘maintenance’ brand-name drugs that millions of Americans rely upon as a vital health link,” Hines says.

He suggests that while her plan calls for ‘temporary’ personal importation, she likely would have to use executive orders to implement ‘temporary ’importation because of Congress’ failure to even vote on bills allowing personal importation of brand-name medicines from licensed, registered pharmacies in Tier One Countries.

“Congress should end its seemingly endless delays, investigations, statements, and business as usual,” Hines says.

As to being able to validate the safety and authenticity of imported medicines which the FDA and Pharma have said is not possible, Hines notes that:

• The Clinton stance clearly relies upon medicines from what can only be construed at Tier One Countries with proven standards of safety and efficacy;

• She points out that the FDA has previously allowed such ‘emergency’ importation;

• This illustrates that, contrary to repeated claims of the Food and Drug Administration regarding personal importation that :

o It is possible to monitor and certify the safety, authenticity of brand name medicines ‘imported’ to the U.S.;

o Since such ‘importation’ would have to be implemented quickly to be of benefit indicates that the FDA is capable of validating the sourcing, manufacture, packaging, safety and efficacy of such medicines. It has for years cooperated with foreign sources for ingredients’ oversight, and has certainly worked with regulatory agencies in other countries during previous ‘emergency’ importation;

o The implementation of ‘temporary importation’ is proof of the safety and efficacy of imported medicines as well as their immediate economic benefit, and, their favorable impact upon Americans’ health.

o The lie to claims by Pharma and the FDA that a medicine allowed to be imported from a Tier One Country cannot be validated would be repudiated.

“A medicine that is imported in an ‘emergency’ situation that is safe and authentic does not become fraudulent after the ‘emergency’ is over, Hines says.

“When a medicine—any medicine—is unaffordable, it is unavailable, and that unavailability creates a health crisis for the individual denied access to vital medicines.”

Hines explains that a ‘temporary importation’ would illustrate the contradiction of a policy that raises questions about the ‘legality’ of personal importation, since it clearly shows that the Federal Government is willing to consider importation as a part of a national policy to lower prescription drug costs to protect the health of Americans;

“It is time that that recognition of the potential benefit to fair pricing of medicines and the right to importation should be extended to the millions of Americans who are unable to afford not only their specialty medicines, but their highly important maintenance medicines that have been proven in the Rand study of enrollees in the Affordable Care Act to improve patient health and lower drug spending”

Hines notes that the Clinton plan calls for consumer involvement and representation in an oversight group to monitor and determine when price abuses by Pharma have occurred, one of the key articles of the American Rx Bill of Rights.

He explains however that the key to the effectiveness of such a group will be based on a determination of the members of the ‘consumer’ advocacy segment and how they will be selected.

“The concept is a valid approach, but only if implemented in such a fashion as to include truly representative advocacy groups that represent patients’ rights and needs,” he notes.

He also says that the strong emphasis in the Clinton plan on the role of generics may be misplaced.

“In what is can only be construed as an admission of the failure of reliance upon generics to lower drug costs because of their being co-opted for many of the price increases in the past 18 months, the Clinton place calls for fines and penalties to be assessed against Pharma and generic industry firms that are found to profit from excessive price increases,” Hines says.

He lauds the plan calling for an end to several key elements of Pharma strategies: One is ending pay-to-delay, a tactic to delay the introduction of generics to replace brand-name drugs scheduled to lose patent protection; another is a call for negotiating Medicare Drug prices; The plan would also call for an end to the backlog of generic applications awaiting approval at the FDA; and, in one of the most dramatic recommendations, it calls for an end to direct-to-consumer (DTC) advertising by Pharma, with the money spent on DTC being redirected to Research and Development.

Hines says that Pharma has, because of its extensive lobbying and financial support of candidates at the state and Federal levels, been able to turn aside any effort to erode its ability to engage in a ‘what the traffic will bear’ pricing approach.

“ If any strategy—be it that of Ms. Clinton or Candidate Trump—is to succeed in lowering prescription drug prices, both candidates would be well-served to remember that years ago, at a press conference after a Pfizer Board meeting, then-CEO Henry McKinnell commenting on remarks by Minnesota Governor Tim Pawlenty said that efforts to lower prescription prices were nothing more than “a Prairie Fire that breaks about every four years as an election issue and then burns out.’’

“It is time to end the pricing abuses of Pharma and to implement policies that will lead to the health benefits that only access to safe, affordable prescription medicines can provide. Failure to do so will once relegate the rights of Americans to enjoy the benefits of good health such access can provide in the ‘ashes of yet another Prairie Fire.’

Senators Decry Mylan’s EpiPen Price-Lowering Tactics As ‘Complex Shell Game’

 Kaiser Health News 

August 31, 2016--In a show of force, 20 Democrats send a letter to the allergy drug maker, demanding answers. They say that the generic price that will be offered by Mylan “is still three times higher than the cost of the branded EpiPen in 2007.”

The Associated Press: 20 Democratic Senators Blast Steep Price Hike For EpiPens
In a sign of growing concern in Congress, 20 Democratic senators are demanding answers about steep price hikes for the life-saving EpiPen injector device. The senators said in a letter Tuesday that price hikes of more than 500 percent have jeopardized access to emergency allergy shots for many Americans. The letter was addressed to Heather Bresch, CEO of the pharmaceutical company that makes the devices, Mylan N.V. Bresch is the daughter of Sen. Joe Manchin, D-W.Va. Manchin did not sign the letter. (Daly, 8/30)

The Wall Street Journal: Senators See ‘Shell Game’ In EpiPen Maker Mylan’s Bid To Ease Access To Allergy Drug
A group of 20 senators called the recent price-lowering overtures from the company that makes the EpiPen emergency auto-injector a “well-defined industry tactic to keep costs high through a complex shell game.” The sheer number of senators – 19 Democrats plus independent Sen. Bernie Sanders – represents a ratcheting-up of the stakes over the dramatic price increases of the emergency epinephrine product from Mylan NV. Mylan has sought recently to quell criticism by announcing discount programs and, on Monday, other plans soon to offer a generic version at half price. (Burton, 8/30)

Morning Consult: Senate Democrats Blast Mylan’s Affordability Moves
The senators, 19 Democrats and independent Sen. Bernie Sanders of Vermont, wrote that the company’s decision to offer a generic version of EpiPens and offer a discount coupon for patients paying the full list price out-of-pocket still results in high costs for patients through insurance premiums. (McIntire, 8/30)

The Star Tribune: Franken Joins Mounting Criticism Of EpiPen Manufacturer 
U.S. Sen. Al Franken of Minnesota has added his voice to the congressional outcry against price increases Mylan pharmaceutical company made to its epinephrine auto-injector that treats potentially deadly allergic reactions. Last week, Sen. Amy Klobuchar of Minnesota called for a Senate Judiciary Committee hearing and asked the Federal Trade Commission to investigate possible antitrust violations by Mylan, which raised the price of a two-pack of its EpiPen product from $100 in 2008 to $500 to $600 in 2016. (Spencer, 8/30)

Los Angeles Times: State Senator Introduces Resolution To Condemn EpiPen Price Hikes
State Sen. Ed Hernandez's attempt to push through a drug pricing transparency bill sputtered this year, but the West Covina Democrat still wants his colleagues to weigh in on the latest controversy in the cost of prescription drugs: the surging price of EpiPens. Hernandez is introducing a resolution that excoriates the anti-allergy device's manufacturer, Mylan, joining a chorus of federal lawmakers who have accused the company of price-gouging. (Mason, 8/30)

St. Louis Public Radio: Epi Pen Price Spike Leaves St. Louisans With Few Options 
So far, [Maureen] Walkenbach’s meticulous monitoring of her son’s food intake has kept her from having to use an EpiPen. But the injectors expire every year, and have to be re-purchased. The Walkenbachs have health insurance, but recently switched to a high-deductible plan. Even with a patient assistance coupon from Mylan, Walkenbach was on the hook for more than $500 for one EpiPen set — a cost she said she’s willing to pay, because going without it would be unthinkable. Instead of three pairs of EpiPens, Walkenbach said the price is forcing her to make do with two — switching one from her kitchen cabinet to her purse whenever she leaves the house. When she forgets it, as she did on a recent trip to the grocery store, she rushes home in a panic.  (Bouscaren, 8/30)

Mylan, PhRMA 'play' Congress and the American Public

by Daniel Hines
Publisher, RxforAmericanHealth

Even before reading this article,  I suggested that perhaps Mylan was implementing a ‘play’ upon the American pubic…first with the price increases, then with the  rapid price decreases, and now the move with a ‘new generic’ ...seems to me to be actions designed to allow Mylan to take the steps necessary to enter the market with a ‘generic’ and Teva must wait until 2017 with approval and a new review,  by which time Mylan will control the generic segment of this market. While the introduction of the generic is not included in this story, the article deals with the PhRMA PR campaign and mind-set of an industry that has ‘played’ the American Public and Congress for decades...
http://www.rawstory.com/2016/08/the-epipen-scandal-runs-deeper-than-most-of-us-realize/