Senator Elizabeth Warren (D-MA) would like to know if the Department of Justice is for real right now.
A few weeks ago, Mylan, the company that makes anti-allergy drug, EpiPen, announced that it had come to a settlement with the DOJ for overcharging The
Centres for Medicare & Medicaid Services (CMS) for EpiPen over a number of years.
The tab, said the company, would come to $465 million. Under the terms, Mylan would not admit to any wrongdoing for classifying its drug as a generic rather than branded medication. Makers of brand-name drugs have to pay higher rebates to states than generics — 23.1% versus 13%. Also,they have to pay additional rebates if their price increases rise more than inflation.
Warren thinks this settlement is light, and informed the DOJ of her feelings in a letter. Her staff calculated how much Mylan made from this misclassification, and she thinks the company owes the government $530 million.
From the letter:
To summarize: If the terms of the agreement announced by Mylan are correct, Mylan wrongly classified EpiPen to maximise its Medicaid revenue, and did not change this classification despite being “expressly told” by CMS that it was wrong. The Justice Department awarded Mylan by imposing a fine that is about $65 million less than the amount Mylan made by defrauding Medicare and Medicaid. In addition, you permitted Mylan to avoid admitting any admission of wrongdoing, collected no additional penalties under the False Claims Act, and blocked other actions against the company that would have require greater accountability.
Under the False Claims Act, companies can be fined $5,500-$11,000 per false claim they have made to the government, plus three times damages.
Mylan came under intense scrutiny in August after it raised the price of a 2-pack of EpiPen to $608 from $100 when it bought the drug in 2007. After Mylan CEO Heather Bresch was called to a hearing Capitol Hill and politicians did a lot of handwringing, CMS also figured out that the company had overcharged them. The SEC is also investigating Mylan.
There could be a fib here, guys
Now here’s the thing, Warren was careful write “If the terms of this settlement announced by Mylan are accurate…” to close her letter.
And that’s because from Wall Street to Washington, ever since this thing was announced, people have been questioning whether or not Mylan was being totally honest about it.
The conundrum was part of a note Alliance Bernstein sent out earlier this week:
“No executed” Mylan–DoJ agreement. Last week we noted ‘slight concern’ Mylan may have been too quick to announce it reached agreement on EpiPen. This week, Senator Grassley demanded more disclosure on the deal and a DC newsletter noted that “There is no executed settlement agreement,” a Justice spokesperson said by email in response to Inside Health Policy inquiry about the mere existence of a settlement. “The Department declines to comment on the company’s announcement“. This could be just keeping a stiff upper lip, but does not do much to make us feel this is a ‘done deal’.
So someone at DOJ says there’s no agreement, and Senator Chuck Grassley has been poking around asking questions.
So Mylan, do you have an agreement or not? Senator Warren is not the only one who wants to know.
We’ve reached out to Mylan for comment, we’ll update this when we hear back.