The sharp rise in price for the lifesaving EpiPen epinephrine injector sparked an outcry from people across the U.S. this summer. Now, concerns about the high price of the device for severe allergy sufferers are being raised by another kind of customer: the federal government.
The U.S. spent $1.29 billion on EpiPens through its public healthcare plans from 2011 to 2015, according to information released this week by the Center for Medicaid and Medicare Services addressing questions from Congress about whether pharmaceuticals firm Mylan charged the federal government a fair price for the device.
In a letter to the Senate Finance Committee on Wednesday, the agency said annual costs for EpiPens jumped more than 460 percent in that four-year period; the government spent $86 million in 2011 and then $487 million in 2015 before corporate rebates.
These cost increases are in line with the skyrocketing prices consumers are paying out of pocket or billing to insurance companies. When Mylan purchased EpiPen in 2007, the cost of a two-pack was $100, but a series of price increases have brought the total cost to more than $600. This summer customers succeeded in focusing attention on the issue, and Mylan is now the subject of congressional and state-level investigations over its pricing practices.
"I share your concerns that unchecked price increases of pharmaceuticals that Americans depend on, such as the EpiPen, directly impact the health and financial status of our beneficiaries, our states, and the federal budget," the Centers for Medicaid and Medicare Services' acting administrator, Andrew Slavitt, wrote in a letter to Democratic Sen. Ron Wyden, ranking member of the Senate Finance Committee.
The Oregon senator requested information from the agency in September about how Mylan's EpiPen pricing had impacted Medicare and Medicaid. The question at the heart of the inquiry was whether a misclassification allowed Mylan to charge the government more for its product.
EpiPen was classified as a generic in 1997, which means the Centers for Medicaid and Medicare Services got a partial refund of 13 percent from the drug's manufacturer. Because EpiPen is patent-protected and there are no approved equivalents, it should not qualify as a generic, Slavitt said. Instead, it should have been labeled as a "single-source" drug, meaning the government should have received a rebate of at least 23 percent.
Mylan was not involved with EpiPen's classification until it purchased the rights to it nine years ago, but the federal agency says it has "expressly told" the company about the incorrect categorization. It's unclear why the issue was not resolved earlier, but Slavitt said it is up to a company to provide accurate information and pay out the proper rebate amounts. The agency said it could not comment on the amount Mylan owes in refunds.
Wyden and New Jersey Rep. Frank Pallone, also a Democrat, said Wednesday's response proved their claim that EpiPen was misclassified and that Mylan had overcharged the government.
"Today's letter is more evidence that while Mylan irresponsibly raised the price of EpiPen, they were also bilking taxpayers out of millions of dollars," the lawmakers said in a joint statement, adding they would "ensure taxpayers get their due."