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

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.

Comments

Re:It's not innovative

[slashrio]

Unfortunately the FDA has evolved into a highly corrupt organisation, so the fact that the FDA didn't approve a competitor's product doesn't mean it was unsafe.
The CEO of Mylan is daughter of a senator, and that could explain a lot.
Now the public opinion has turned against them, and rightly so, and after the chance she has got during the hearing to explain things and to offer improvement, it is very good that her total lack of empathy for the patients, her customer base, is followed up by the FEDs investigating inappropriate financial behaviour, of which she has been warned many times by the authorities.

Isn't earning a profit part of capitalism?

[Streetlight]

I'm not sure what all the fuss is about regarding the profit on a medicine and why Mylan would need to lie to congress or anyone else regarding its profit. If they have a patent on a product the company can charge what ever they want and if folks don't want to pay the price they don't have to buy it. In our economy there are many products where the cost of purchase has little relationship to the cost of manufacture. Other examples in the pharmaceutical industry are rampant including those of Martin Shkreli (see https://en.wikipedia.org/wiki/...). There are two examples cited where the price of drugs purchased by companies he was associated with were raised 5,556% (the antiparasitic Daraprim) and 2,000% (Thiola). The price of the second has not been reduced even though Shkreli was removed from the company. Not sure about the first. These prices made a lot of money for the companies, its share holders and the senior executives. Isn't that what capitalism is all about?