Republicans on the Senate Finance Committee have joined the chorus calling for an investigation into Medicaid's handling of manufacturer rebates for EpiPen.
The 14 Republicans on the committee sent a letter to HHS Inspector General Daniel Levinson asking him to review the CMS' administration and oversight of the Medicaid Drug Rebate Program in regards to the EpiPen epinephrine auto-injector. Recent reports, including a memo from the National Association of Medicaid Directors, have noted that EpiPen has been misclassified as a generic product, which means manufacturer Mylan Pharmaceuticals may be paying less in rebates.
In exchange for state Medicaid coverage for most of their drugs, manufacturers agree to pay quarterly rebates to states, who share the money with the federal government. About 600 drugmakers participate in the program, which is intended to offset the overall cost of prescription drugs under Medicaid.
Mylan has said it will soon offer a generic version of EpiPen for half the price of the brand drug, which is listed at $608. HHS didn't immediately respond to a request for comment.
The letter follows a similar memo sent last week from Republicans on the House Energy and Commerce Committee who said the CMS brushed off their requests for information, only saying that they were looking into the issue and had informed manufacturer Mylan Pharmaceuticals of the problem. Mylan has been the subject of intense public backlash for the high price of the EpiPen.
It also comes the same day that West Virginia Attorney General Patrick Morrisey filed a petition in federal court to force Mylan to respond to a subpoena filed several weeks ago seeking evidence of possible state antitrust and Medicaid rebate violations. Mylan CEO Heather Bresch, who is the daughter of Democratic Sen. Joe Manchin of West Virginia, has defended the price hikes.
In the latest letter, the senators write that Mylan may be taking advantage of the rebate program by paying the generic rebate of 13% of the average wholesale price instead of the 23.1% rebate required for branded drugs. The House letter also expressed concern that the misclassification may be affecting the 340B drug program that provides discounts to safety net facilities, because the 340B ceiling price is linked to a drug's Medicaid rebate amount.
“Recent controversy surrounding Mylan's prescription drug product EpiPen raises questions about the controls in place to ensure that drug manufacturers are paying appropriate rebates,” the senators wrote. “A thorough and timely review of these issues by the Office of Inspector General will provide important information to Congress about how CMS is overseeing this significant part of the Medicaid program and where changes in policy need to be made to protect the program against these types of vulnerabilities in the future.”
The makers of brand drugs are also required to pay additional rebates if the costs of their drugs rise higher than inflation. Generic drugs have not been subject to that mandate. They won't be until 2017, when that provision of the 2015 Bipartisan Budget Act goes into effect. The prices of 22% of top generic drugs rose faster than inflation between 2005 and 2014.
Medicaid spent $42.7 billion on branded and generic drugs in fiscal 2014 and received $19.9 million in rebates, according to the letter. “We are concerned that the controls in place, if any, are inadequate to ensure that Medicaid is receiving the full amount of rebates afforded to it by law,” the senators wrote.
In response to public frustration, Mylan announced it was developing a generic product, expanded its patient assistance programs and increased its discount card from $100-off to $300-off an EpiPen two-pack. But people covered under Medicare, Medicaid and other state and federal government programs aren't eligible for that card due to anti-kickback laws.
Tuesday's letter was signed by Senate Finance Committee Chairman Orrin Hatch (R-Utah) and GOP Sens. Chuck Grassley of Iowa, Mike Crapo of Idaho, Pat Roberts of Kansas, Mike Enzi of Wyoming, John Cornyn of Texas, John Thune of South Dakota, Richard Burr of North Carolina, Johnny Isakson of Georgia, Rob Portman of Ohio, Patrick Toomey of Pennsylvania, Dan Coats of Indiana, Dean Heller of Nevada and Tim Scott of South Carolina.