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Feds Go After Mylan For Scamming Medicaid Out of Millions On EpiPen Pricing (arstechnica.com) 198

An anonymous reader quotes a report from Ars Technica: Over the nine or so years that Mylan, Inc. has been selling -- and hiking the price -- of EpiPens, the drug company has been misclassifying the life-saving device and stiffing Medicaid out of full rebate payments, federal regulators told Ars. Under the Medicaid Drug Rebate Program, drug manufacturers, such as Mylan, can get their products covered by Medicaid if they agree to offer rebates to the government to offset costs. With a brand-name drug such as the EpiPen, which currently has no generic versions and has patent protection, Mylan was supposed to classify the drug as a "single source," or brand name drug. That would mean Mylan is required to offer Medicaid a rebate of 23.1 percent of the costs, plus an "inflation rebate" any time Mylan raises the price of the brand-name drug at a rate higher than inflation. Mylan has opted for such price increases -- a lot. Since Mylan bought the rights to EpiPen in 2007, it has raised the price on 15 separate occasions, bringing the current list price to $608 for a two-pack up from about $50 a pen in 2007. That's an increase of more than 500 percent, which easily beats inflation. But instead of classifying EpiPen as a "single source" drug, Mylan told regulators that it's a "non-innovator multiple source," or generic drug. Under that classification, Mylan is only required to offer a rebate of 13 percent and no inflation rebates. It's unclear how much money Mylan has skipped out on paying in total to state and federal governments. But according to the state health department of Minnesota, as reported by CNBC, the misclassification cost that state $4.3 million this year alone.
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Feds Go After Mylan For Scamming Medicaid Out of Millions On EpiPen Pricing

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  • Simple Solution (Score:5, Insightful)

    by AK Marc ( 707885 ) on Friday September 30, 2016 @10:45PM (#52992929)
    The company claimed on official government forms for multiple years that the drug is a generic. Make it so. Job done. The government can do that.
    • by Joe_Dragon ( 2206452 ) on Friday September 30, 2016 @10:47PM (#52992937)

      ban drug ad's on tv!

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Yup. Expire the patent.

      There'll be clones on shelves in under a week.

    • Re:Simple Solution (Score:5, Informative)

      by ShanghaiBill ( 739463 ) on Friday September 30, 2016 @11:02PM (#52992981)

      The company claimed on official government forms for multiple years that the drug is a generic.

      The drug, epinephrine, is generic. It is adrenaline, which your body produces naturally. There is no patent stopping generic injectors, but so far none have been approved by the FDA. Teva submitted an injector, but the FDA denied approval for reasons that are not clear.

      • Re:Simple Solution (Score:5, Informative)

        by pthisis ( 27352 ) on Friday September 30, 2016 @11:40PM (#52993069) Homepage Journal

        The drug, epinephrine, is generic. It is adrenaline, which your body produces naturally. There is no patent stopping generic injectors, but so far none have been approved by the FDA.

        Yes, they have. Adrenaclick's been on the market (with FDA approval) for 5+ years, and costs like 1/4 what Epipen does.

        http://www.consumerreports.org... [consumerreports.org]

        • Ask your doctor for a generic? Sounds like work to me. It's much easier to pass a bunch of complicated regulations to force things to be cheaper so I don't have to do anything.

          • by jedidiah ( 1196 )

            I've never had to ask a doctor to prescribe a generic EVER. If there is a generic it just gets substituted by the pharmacist because that's how things actually work. If there is a generic, you don't really have to do anything.

            Why it seems to be case for this particular drug is certainly something worth examining.

            • Re:Asking? (Score:4, Interesting)

              by ColdWetDog ( 752185 ) on Saturday October 01, 2016 @10:45AM (#52994207) Homepage

              Because Adreanaclick's product is not recognized as a AB rated generic [takerx.com], meaning that it can't be directly substituted by the pharmacist. The physician can WRITE for the particular product, but they have to actually do that.

              For all of the Sturm Und Drang, I don't understand why the manufacturers of the other injectors and the mail order pharmacies don't run an advertising campaign to 'ask your doctor' to prescribe the specific product rather than 'Epi-Pen'.

              Yes, Mylan is a slime ball company but there are ways around this.

            • I've never had to ask a doctor to prescribe a generic EVER. If there is a generic it just gets substituted by the pharmacist because that's how things actually work. If there is a generic, you don't really have to do anything.

              Why it seems to be case for this particular drug is certainly something worth examining.

              Wrong. The Pharmacist calls the prescribing Doctor. It is up to the Doctor to OK the swap to a generic drug. Then the doctor issues a NEW prescription for the generic drug. The new prescription is put into Pharmacy records. You never see it. Just like if you run out of refills. The same process happens.

              • by HiThere ( 15173 )

                If it's an actual generic, I always get the switch happening automatically. But there are things which are essentially generic, but which are different. There is also corruption, like the withdrawal of generic colchicine from the market so that only the trademarked version of the same drug can be purchased, at a vastly increased price. It *was* a generic, but not anymore.

                This appears to be a case where each slightly different injector is considered a separate delivery system so it's not a generic equival

            • by pthisis ( 27352 )

              I've never had to ask a doctor to prescribe a generic EVER. If there is a generic it just gets substituted by the pharmacist because that's how things actually work. If there is a generic, you don't really have to do anything.

              Whether or not the pharmacist is allowed or required to substitute a generic varies by state (e.g. it's mandatory in NJ and unlawful in OK, and up to the policy of the pharmacy in FL; and in states like HI/KY/NC/SC/TN the legality varies by drug).

              It also varies from case to case (in th

              • by HiThere ( 15173 )

                Yes, but it's not clear to me that it's even possible to write a generic prescription for an epinephrine injector. It looks as if they were approved as separate drug+delivery systems, and thus the prescription may well need to specify which one.

                • by pthisis ( 27352 )

                  It does not. People elsewhere in the thread have confirmed this, as does Consumer Reports:

                  http://www.consumerreports.org... [consumerreports.org]
                  In most states, to get the low-cost, EpiPen alternative, you can't use a prescription for "EpiPen" from your doctor. That's because pharmacists at your drugstore likely won't be able to automatically substitute the low-cost version if your prescription is written for EpiPen. Instead, ask your doctor to write a prescription for an "epinephrine auto-injector"

      • Re:Simple Solution (Score:5, Informative)

        by donaldm ( 919619 ) on Friday September 30, 2016 @11:46PM (#52993083)

        The company claimed on official government forms for multiple years that the drug is a generic.

        The drug, epinephrine, is generic. It is adrenaline, which your body produces naturally. There is no patent stopping generic injectors, but so far none have been approved by the FDA. Teva submitted an injector, but the FDA denied approval for reasons that are not clear.

        The patent on epinephrine [drugpatentwatch.com] expired Sep 11, 2005. Basically, the Epipen is a mechanism for delivery of the drug which could easily be likened to a simple auto-injection procedure or as it was known during the Second World War a Syrette [wikipedia.org].

        Yes, why don't we patent a device known for over 60 years, put a new coat of paint on it and (this is the most important part) wrap it up in legalese so that professional people who are supposedly peers have no idea what the new patent is about and get rich. It does help if a few palms are greased as well.

      • Re: (Score:2, Offtopic)

        by FrankHaynes ( 467244 )

        They abandoned adrenaline when hyronalin was discovered.

    • The company claimed on official government forms for multiple years that the drug is a generic. Make it so. Job done. The government can do that.

      Why would the government do that? The government is responsible for these excessive prices in the first place.

      In May, the FDA actually attempted to hurt generics even more by "allowing them to change labels" relative to prescription drugs; that sounds harmless, until you realize that what that actually means is that it places generic drug manufacturers at huge risk

      • by Megol ( 3135005 )

        Hello clueless idiot. No, the FDA isn't the problem as anyone that actually looked into this would know. Generics are available as the drug is available, other types of auto-injectors are available and *shock* there are even auto-injectors with the drug in question available!

        The problems are elsewhere like Mylan actively hindering places (schools++) that need to stock auto-injectors to use a competitor product, the FDA have nothing to do with that.

        • No, the FDA isn't the problem as anyone that actually looked into this would know. Generics are available as the drug is available, other types of auto-injectors are available and *shock* there are even auto-injectors with the drug in question available!

          The FDA puts limits on the circumstances under which people can substitute generics in prescriptions. Furthermore, government regulations have historically isolated consumers from the prices of such drugs, which is why there didn't use to be a lot of compla

    • by kaladorn ( 514293 ) on Saturday October 01, 2016 @01:22AM (#52993243) Homepage Journal

      With the patent system as it is, where genetic codes and proteins can be patented, and where protection for drug profits is long and deep, there are situations like this that come up that allow unscrupulous companies to hike drug costs ridiculously like these clowns at Mylan.

      Yes, many drug research efforts don't pan out. But Epinephrine has been out for a long time. Is anyone seriously going to try to tell me that $50 in 2007 became $304 in 2017? Even given the bogusly low inflation rates that are officially reported, that's insane.

      This is profiteering. If the company didn't need to profiteer in 2007, why do they in 2017? No good reason methinks.

      How about the definition of sole source is 'no equivalent product available at present'?

      And how about you cap the rates at which drug costs can increase unless the providers can show material evidence that their costs have escalated so much?

      I don't have $608 to shell out (US) for something I have to replace every 1-2 years. I'm carrying an old epi-pen that's probably not as efficacious now, but it's likely still better than no pen. I just can't afford the money to get a new one (let alone two, since protocol says you hit yourself with the first and about 30 minutes later the second if you haven't reached emergency medical care).

      This should be a true generic. There should be equipment whose patents have an earlier mandatory expiry because they exist in the space called 'in the interest of public health'. I'm not suggesting these guys shouldn't have got their money back, but seems to me they are well beyond that point now.

      On the other hand, this is exactly why the government or NGOs should be investing in some sorts of medical research in the public interest and making the product patents entirely open and available.

      Epinephrine isn't patented. Its the injector. This seems like the kind of thing a Gates Foundation or even the Government could underwrite the development of (and may have already for Atropine and the like in prior days, if we call those syrettes an early version). Make the injector patent available and then it truly is generic because epinephrine is not patented.

      The reality is that big Pharma has great lobbyists, political connections, and lawyers and the whole US patent system around biomedical issues defies any sort of common sense or rational thinking.

      I hear rumours of alternatives, but I'm not sure they are available beyond the US borders. The Epipen fiasco and the price rise has hit many of us living in other countries too, but I'm not sure any alternatives exist where I live. I am going to look into that now though.

      Patents should help protect innovation, but not form monopolies artificially (well, that may be other legislation that does that but that also needs looked at), should not have extensive duration, and should have clauses surrounding medical equipment that if the equipment price rises too quickly or if the provider becomes sole source, that the patent becomes licenseable by other companies for a very modest fee. At some point, the public interest has merit at least as great as profits for corporations.

      • by swalve ( 1980968 )
        While I completely agree that Mylan is a cunt here, aren't there other options besides an autoinjector? Like a vial and a 50mg syringe?
    • by swalve ( 1980968 )
      epinephrine is generic.
    • Epinephrine is generic, their little dohickey gadget isn't though. Not trying to defend, but i don' think anyones trying to say epinephrine (adrenaline) is a proprietary medication. Otherwise we'd all be on the hook for licensing fees every time fight or flight kicks in.

    • One problem is that the only word that people know how to use to describe Epipen-like injectors is, er, well "Epipen". Arguably the trademark word "Epipen" has become part of the standard English language like "Escalator", "Aspirin", "Jello" and the like. The trademark puts any competitor (present or future) at a huge disadvantage because they can't use the word Epipen, and the public doesn't know how to ask for anything else.

      Another big problem in this space is that the time and money to get FDA and insur

      • by lgw ( 121541 )

        You're wrong about Aspirin, BTW. Bayer lost the rights to that trademark (along with heroin) because they made chemical weapons for the Germans in WWI.

  • grumpycatgood.jpg. Send the CXX suite to prison for a few years, fine then the millions they made on the scam, and maybe it will slam on the brakes to other companies jacking up the price of generics that were discovered 50 years ago.
    • Yea cause Daddy of the Current CEO is a Senate Democrat.
    • grumpycatgood.jpg. Send the CXX suite to prison for a few years, fine then the millions they made on the scam, and maybe it will slam on the brakes to other companies jacking up the price of generics that were discovered 50 years ago.

      The only reason they could jack up the prices so much is because the FDA and the federal government gave them the means and the monopoly to do so in the first place; and they did that because the company is politically well connected.

      All the posturing from politicians now is ju

  • "bringing the current list price to $608 for a two-pack up from about $50 a pen in 2007. That's an increase of more than 500 percent," Is my math wrong or should is that increase more like 1200%?
    • Re: (Score:3, Insightful)

      by Jzanu ( 668651 )
      Your math is off "$608 for a two pack" means $304 per pen. Compared to $50 per pen that is a 6-fold change equal to a 500% increase (500% + 100%).
  • $4.3M in fines... Lets see, increase the price of EpiPens by $200... Report it as a "research investment"...

  • by rsmith-mac ( 639075 ) on Friday September 30, 2016 @11:18PM (#52993019)

    As much fun as it is to use Mylan as a punching bag these days, there's a final point in the Ars article that leads me to think this is hardly in the bag for the Feds.

    The question of whether Mylan had misclassified EpiPens came up during a recent Congressional hearing of the House Oversight and Government Reform Committee. Mylan CEO Heather Bresch, defending the company's prices at the hearing, stood by the classification. She noted that EpiPen was classified as a generic before Mylan bought the drug in 2007.

    And if that's true - that Medicare was already applying the âoenon-innovator multiple sourceâ rebate schedule to the EpiPen back in 2007 - then that makes this case a lot murkier. The Feds would then have to make a case as to why the drug can and should be reclassified at the higher âoesingle sourceâ tier. It's clear that in practice the EpiPen is a single source device, but the conflict at the heart of this is one of bureaucracy and not medical practices; the Feds would need to justify both the higher rate now, and why they're not culpable for approving the lower rate in the first place.

    Given how long that this is going on, I suspect that this isn't an easy case to prove, otherwise the Feds would have done it already. Instead it's probably being brought back up now to either apply additional pressure to Mylan, or to strike while the political iron is hot.

    • by pthisis ( 27352 )

      And if that's true - that Medicare was already applying the âoenon-innovator multiple sourceâ rebate schedule to the EpiPen back in 2007 - then that makes this case a lot murkier. The Feds would then have to make a case as to why the drug can and should be reclassified at the higher âoesingle sourceâ tier. It's clear that in practice the EpiPen is a single source device

      Is it clear? There are other options out there (e.g. Adrenaclick), if you get your doctor to prescribe an "epinephrine

      • by swalve ( 1980968 )
        Every prescription I've ever gotten has had a thing on it that says that it can be filled with generic equivalents. And responsible, ethical doctors would never write a name brand on a prescription.
        • > And responsible, ethical doctors would never write a name brand on a prescription.

          There can often be subtle differences, including quality, packaging, and filler components, that make one version more effective for a specific patient. So yes, sometimes doctors do name a specific version of a medication for good medical reasons. "Generic" does not mean identical.

        • Sometimes that may not be the best option for the patient however:

          "Generic antiarrhythmics are not therapeutically equivalent for the treatment of tachyarrhythmias" http://www.ajconline.org/article/S0002-9149(00)00715-3/abstract [ajconline.org]
    • When you quintuple the price of an already expensive, widely purchased, life-saving device that is paid for largely by Medicaid and Medicare funds, you should expect that the government that is paying for your device will take notice and comb through the salient documentation to see if there is some possible legal problem with your price increase. Had the government not done so, we'd all be screaming that they were negligent in their financial oversight duties.
    • by makomk ( 752139 )

      It may well have been a generic with multiple sources back in 2007. As I understand it, Mylan made some design tweaks, patented them, and then claimed that anyone making a generic version would be infringing on their new patents.

  • The fact that Mylan can charge these prices is government regulations and government-granted monopolies.

    And it's hardly surprising why Mylan got this monopoly on a silver platter: they are politically well connected (with Democrats in this case).

    • by pthisis ( 27352 )

      The fact that Mylan can charge these prices is government regulations and government-granted monopolies.

      It's more dumb consumers and good marketing. There are cheaper alternatives like Adrenaclick available if you ask for a generic epinephrine auto-injector rather asking for Epipen by brand-name. See, e.g, Consumer Reports http://www.consumerreports.org... [consumerreports.org]

      Meanwhile, if you’re looking for a low-cost alternative to the EpiPen, we recently recommended generic Adrenaclick, also referred to as an "epine

      • by whoever57 ( 658626 ) on Saturday October 01, 2016 @12:10AM (#52993123) Journal
        If the pharmacist can't substitute the Adrenaclick for an EpiPen, then EpiPen isn't generic.
      • if you ask for a generic epinephrine auto-injector rather asking for Epipen by brand-name

        This is really the doctor's decision and also their fault when they don't prescribe the generic name when they should know better.

      • It's more dumb consumers and good marketing.

        It's not the consumer's fault. As you point out, if the doctor writes EpiPen, then the pharmacist can't substitute. Furthermore, the price increases happened while insurance mostly covered the costs.

        Personally, I make a point of getting the most expensive drugs out of my insurance company: under ACA, I am forced to overpay for my insurance, so I'm going to get any cent out of it that I can.

        Furthermore, the lack of more and better alternatives is the result of gove

        • You maker the most expensive choice, and you complain that paying for it costs a lot. Brilliant logic.

          • You maker the most expensive choice, and you complain that paying for it costs a lot. Brilliant logic.

            My choices have no influence on how much I pay. Furthermore, I am already forced to pay much more than I actually consume. Hence, when I do consume, I'm going to insist on the best and most expensive treatments and drugs I can get.

            And I'm not "complaining", I'm explaining to you why drug prices are high and insurance is so expensive, because I'm doing what everybody else is doing: it's the rational and reas

  • these clowns should get crucified for basically holding the public hostage

    1 RICO charges should be filed against the company and the execs (i think its called separately and corporately liable??)

    2 the IRS should do a full bore forensic audit on the paperwork for the last 7 years

    3 the company should be required to pay back every penny plus 25% of the increase

    4 their entire patent portfolio should be wiped and they should be required to assist any company currently in the same or semi related market on buildi

    • by no-body ( 127863 )

      What to you want to do? The holy grail in US - and other's is money - the more one can squeeze out, the better. Where it comes from, what does it do, does not matter, those are the losers and not smart enough, so they are the problem.
      Look at airlines with their charges for non-refundable ticket returns. They can charge any obscene price they want. Many people just drop the game and the tickets can be sold again - profit. Read somewhere that 7 % of all non-refundable tickets will not be used - ok, so it's d

    • Yes get the pitchforks and burn down what ultimately is a small part of a large system.

      The MyLan Epipen is available for $37 in Australia. What makes such a bastard of a company corrupt in your country but not in mine.

  • Drug Dealers steal money, film at 11.

  • Why would Mylan agree to such terms for Medicaid? If Mylan just says "This is the price, buy it, don't buy it, develop an alternative, approve an alternative -- we don't care. If you don't commit to buying some number of units, we may not be able to meet your demands so you will have to buy them at inflated prices on the secondary market. Let us know by next Tuesday.", then Medicaid needs to pay for it or declare that it's not a covered medication for those on Medicaid.

    Presumably Medicaid could institute a

    • For the same reason every pharma company concedes massive bulk discounts in other countries.

      • by uncqual ( 836337 )

        The difference is, the US market is pretty much the last place they can actually make a profit when taking into account R&D costs of the successful drugs and the ones that never make it to market (or make it to market and result in lawsuits/settlements) so I would expect them to defend this last moat vigorously.

        Of course, maybe they figure that if the US consumer stops subsidizing other countries, they can just raise prices in other countries using the same strategy I expect they would be using now with

    • by sjames ( 1099 )

      Because if they do too much of that, they WILL be replaced and then the gravy train comes to a stop.

      • by uncqual ( 836337 )

        They would be "replaced" and drug development (which are pursued, which are not) would then be decided by risk adverse bureaucrats and special interest politicians (some famous person has rare disease X and that results in, irrationally, calls and "online petitions" to spend a lot of money on drugs to treat X -- thereby reducing spending on development of treatments for much more common diseases).

        This stifles innovation and, after 15 years or so, it will be obvious to all that the rate of improvements in m

  • UK NHS Price (Score:2, Informative)

    by Anonymous Coward

    The UK NHS net prices for the 3 alternatives approved in the UK are:

    Emerald (iMed) £26.94
    EpiPen (Meda) £26.45
    Jext (ALK-Abelló) £23.99

    (aproximately US $30 to $35)

    https://www.evidence.nhs.uk/formulary/bnf/current/3-respiratory-system/34-antihistamines-hyposensitisation-and-allergic-emergencies/343-allergic-emergencies/anaphylaxis/adrenalineepinephrine

  • Epinephrine is not a "brand name drug". It's a hormone. Humans produce it. Animals produce it. It's been used medically for scores of years. It's as much of a "brand name" as insulin. Epi-Pen is the INJECTOR, not the drug itself. Now if you're going to tell me that no one else should be allowed to produce an auto-injector - ANY auto injector, because someone has a patent on one DESIGN, then America deserves this. Insulin syringe, 1:1000 epinephrine ampule 1cc, inject .5 cc subcutaneous or im and voila, the
    • You can make your own autoinjector - you just have to get the FDA to approve it. Not impossible, obviously, but expensive and time consuming. Several companies have done this but have run into trouble in manufacturing. It still isn't trivial to manufacture a sterile, idiot proof device.

      Complicating this is the bizarre US system of controlled uncontrol. Medicare / Medicaid cannot ask for discounts on drugs. That's the law (which certainly could be repealed, but somehow, hasn't been).

      Further, the generic

  • It makes me sad to read all these cries for supposedly needed increases in regulation and how supposedly the Mylan situation shows that "free market" failed. No, it shows entirely the opposite. The whole reason the situation is the way it is is BECAUSE OF vast amounts of regulations. The patent system needs a total reform and there needs to be a very through audit into the practices of the FDA.

  • Reading the posts here, one comes up with a very interesting conclusion.

    Private company hikes prices by a lot, and scams the Guvmint.

    Which somehow becomes an indictment of "socialized" medicine, and showing how the private market is superior and honest and trustworthy.

  • You can cheat the citizens, but you can never cheat Uncle Sam. Doesn't matter if we get screwed, only if the government sees a loss. Then suddenly it becomes a priority.

  • Every single Mylan employee who needs an Epipen should be found, their allergy triggered and left to die without an Epi.

  • They should simply rescind the patent as punishment for stiffing the government.

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