WASHINGTON — Senators are asking the Justice Department to investigate whether pharmaceutical company Mylan acted illegally when it classified its life-saving EpiPen as a generic drug and qualified for lower rebate payments to states.
The chairman of the Senate Judiciary Committee, Sen. Charles Grassley, R-Iowa, and Democratic Sens. Richard Blumenthal of Connecticut and Amy Klobuchar of Minnesota sent a letter to Attorney General Loretta Lynch on Wednesday and suggested the company may have gamed the system to divert millions of dollars from taxpayers.
Mylan CEO Heather Bresch has come under fire in Congress as the price of the emergency allergy shots has skyrocketed in recent years. The list price of EpiPens has grown to $608 for a two-pack, an increase of more than 500 percent since 2007.
At a House hearing last week, Bresch said her company, with sales in excess of $11 billion, doesn’t make much profit off each pen and she signaled that Mylan has no plans to lower prices. Republicans and Democrats criticized her for being vague about the company’s finances and profits.
In the letter, the senators said that Mylan “may have knowingly misclassified EpiPens, potentially in violation of the False Claims Act and other statutes.”
Under the Medicaid Drug Rebate Program created by Congress, drug companies pay a percentage of their revenues to states — known as rebates — to try and help protect states from high drug prices. The drug companies themselves are responsible for deciding whether their products should be classified as non-innovator drugs, which pay smaller rebates to the states, or innovator drugs, which pay larger rebates.
Mylan has classified the EpiPen as a non-innovator multiple source drug. That classification usually is reserved for older drugs available from multiple sellers. That means the company is paying lower rebates, even though there is currently no direct competitor to the EpiPen.