-- Three members of the Senate Judiciary Committee, in a letter sent today to Attorney General Loretta Lynch, have asked the Justice Department to investigate whether EpiPen manufacturer Mylan incorrectly classified its lifesaving product to save millions of dollars in required payments to states.
Chairman Chuck Grassley, R-Iowa, and Sens. Richard Blumenthal, D-Connecticut, and Amy Klobuchar, D-Minnesota, believe Mylan may have violated the False Claims Act by classifying EpiPen as a generic drug under the Medicaid Drug Rebate Program. That classification allowed the company to pay a lower percentage of its revenues back to states as rebates.
Because Mylan's EpiPen doesn't have an FDA-approved competitor, the senators argue, the company should have classified it as an "innovator" drug, which would have required paying a larger rebate to states.
“Just as they’ve overcharged consumers, they are also overcharging the government and, potentially, fraudulently lying to the government, and that’s a crime,” Blumenthal told ABC News today. “If Mylan misstated to the government the nature of its product so as to inflate its own profits, it should be held accountable.”
Congress has scrutinized the embattled pharmaceutical company since August after it dramatically raised the price of its EpiPen, which jumped from $100 for a two-pack in 2009, to more than $600 in 2016, according to medical literature.
Company CEO Heather Bresch appeared before a House committee investigating the company's pricing last week, and was criticized by Republicans and Democrats for nearly four hours for not offering a transparent picture of the company's finances.
Bresch did not apologize for the company's pricing system, calling the $600 price tag "fair." Armed with a number of posters showing the company’s earnings and expenses, she argued that Mylan only makes a profit of $50 on each pen, and has put the product in schools for free.
But, according to a new Wall Street Journal report, Bresch understated the company's profits to Congress while she was under oath. Mylan makes closer to $160 in profit before taxes for a two-pack of EpiPens, the Journal found.
That panel has given Mylan until Friday to provide additional financial documents to clarify the company's profits.
The company said in a statement today that it has "previously stated that the EpiPen Auto-Injector meets the definition of 'non-innovator' drug in the Medicaid rebate law. EpiPen Auto-Injector has been classified as a non-innovator since long before Mylan acquired the product."
"Mylan’s classification of EpiPen Auto-Injector as a non-innovator drug is consistent with longstanding written guidance from the federal government. Just this year, the government adopted a new rule intended to clarify ambiguities in the Medicaid rebate law. The rule establishes a new process for pharmaceutical companies to follow if they have products, like EpiPen®, approved under a [sic] what the FDA calls a 'new drug application' that they believe should continue to be treated as a non-innovator drug.
"The new process calls for the submission of an application for non-innovator status to be submitted to CMS on or before April 1, 2017. It would be premature to comment further on this issue until the CMS process has concluded.”
"The Justice Department received the letter and will respond accordingly," the department said in a statement. "The Department does not confirm or deny the existence of an investigation."