The US government spent over $US1.3 billion ($1.7 billion) on EpiPens from 2011 to 2015. But Mylan, the makers of EpiPen, has been overcharging the government for the life-saving allergy medication by misclassifying it as a generic, rather than a name brand drug. If you don't know whether to laugh or cry at this point, you're not alone. Mylan CEO Heather Bresch, seen lying to the House Oversight and Government Reform Committee on 21 September 2016 (Photo by Alex Wong/Getty Images)
When the US government pays for drugs under Medicare and Medicaid, drug companies are required to reimburse a certain percentage of that price. In the case of EpiPen, that reimbursement is 13 per cent of the total cost, which is standard for a generic drug. But EpiPen isn't a generic drug. According to the Centres for Medicare and Medicaid Services (CMS), Mylan should be paying 23.1 per cent, which is the reimbursement rate for name brand drugs.
CMS won't say yet how much Mylan owes the US government for misclassifying the EpiPen as a generic. But Senator Amy Klobuchar of Minnesota has been at the forefront of investigating Mylan's price gouging and contends that it has cost her state at least $US4 million ($5.2 million) in just a single year.
"In Minnesota, the Department of Human Services has estimated that this misclassification will cost our state more than $4 million in overpayment in just one year," Klobuchar said in a statement. "But that's just one state in one year for one drug. We need to clear answers on how deep this misclassification goes, how much it has cost taxpayers across the country, how many other drugs may be misclassified, and how we get that money back."
One of the things that has sparked so much outrage over Mylan's price gouging for the EpiPen is the lack of a generic alternative, so these new revelations are particularly appalling to consumers. Mylan announced that it will offer a generic of the drug soon.
The news of Mylan overcharging the government came out Wednesday on the heels of revelations that Mylan CEO Heather Bresch had lied to Congress about how much the company makes per EpiPen. Bresch had told a Congressional committee that they make $US100 ($131) on every two-pack of EpiPens, when in fact the company makes $US160 ($210).
We'll see if Mylan's generic comes out before all the execs wind up in prison.