Loyola University Chicago School of Law, JD 2017
Mylan has already been under public scrutiny for increasing the price of its EpiPen allergy shots. Last week the State of West Virginia launched a Medicaid fraud investigation questioning Mylan’s price hike and compliance with drug rebate laws.
Mylan Pharmaceuticals participates in West Virginia’s Medicaid program, administered by the West Virginia Department of Health and Human Services Bureau for Medical Services (BMS). BMS reimburses Mylan—at rates set by BMS—for covered pharmaceuticals prescribed for Medicaid beneficiaries. Mylan then pays BMS for some of the reimbursement through rebates. The Medicaid rebates are set at different rates depending on whether the drug is considered an “innovator” (brand name drug) or a “non-innovator” (generic drug). Drug manufacturers who do not have any approved competitors are required to pay at least 23.1% of the average manufacturer price to participate in the Medicaid program. Generic drugs are only subject to a 13% rebate. Although the EpiPen is generally sold as a brand name drug, Mylan has been paying at the significantly lower non-innovator level, which subjects Mylan to a potential Medicaid fraud action in West Virginia.
The Attorney General of West Virginia initially issued a subpoena to Mylan August 26, 2016, and Mylan agreed to cooperate but has failed to turn over all of the records requested. Mylan officials contended that they could not hand over the records until the congressional hearings regarding the price increase were completed. Earlier this month, lawmakers started an investigation of Mylan for overcharging the Medicaid program for allergy treatments. According to Mylan, it has complied with all laws and regulations for drug rebates. New guidelines will also require Mylan to file as a non-innovator by next April. Last week, the Attorney General filed a petition to enforce the investigative subpoena and for related relief.
Mylan acquired to the EpiPen rights in 2007 when is cost $50 for a single EpiPen. Since then, it has raised the price by over 400% to $600 for a two-pack. However, in response to the outcry by consumers and politicians, Mylan recently announced that it will introduce a generic version soon for $300. Mylan shares have dropped by 15% in the last month and Mylan is also being investigated for violation of antitrust laws. Congress and consumers are pushing for more affordable drugs, but the EpiPen controversy has brought greater attention to the Food and Drug Administration’s (FDA) backlog for approval of generic drugs. According to Kaiser Health News—as of July 1st—there were 4,036 generic drug applications waiting for approval and it takes about 47 months, on average, for a generic drug to receive approval from the FDA.