Did Mylan EpiPen Swindle The U.S. Government

What the Mylan Epipen Scandal Tells Us

According to the recent figures released by the Centers for Medicare and Medicaid Services, Mylan NV overcharged the U.S. government by millions of dollars for its EpiPen products. This daunting number adds to the growing case against EpiPen’s “generic” label and brings forth an array of medical, legal, and ethical questions.

Over the past nine years, the cost of Mylan’s EpiPens increased sixfold. Patients with severe allergies use EpiPens to prevent airway blockage during an attack. Between 2011 and 2015, the U.S. government paid over $1 billion to Mylan for its epinephrine injections, an outrageous number.

CMS also contends that Mylan has underpaid the Medicaid rebates for the EpiPens by classifying them “generic” instead of “brand” medication.

Why is this difference so important?

A “generic” medication, also known as a non-innovator, is a medication that is comparable to a brand or reference drug in virtually every way – dosage, strength, performance traits, route of administration, etc.

In contrast, a brand drug protects itself with a patent, also known as a license to own the rights to any invention (in this case, a medication). Generic drugs possess different rebate rules from a brand-name drug.

Thus, the entire case hinges on the EpiPen classification. If the court decided that EpiPen is indeed a generic medication, then Mylan is only required to rebate Medicaid 13%. However, if it is actually a brand name, as the House Committee on Oversight believes, then Mylan truly has overcharged the United States.

At this point, the U.S. Government holds a hefty amount of evidence against Mylan. In recent hearings, the Acting Administration of the CMS stated that Mylan received multiple letters from them explaining the drug classification guidelines.

The CMS also directly told Mylan’s CEO, Heather Bresch, that the drug was not classified correctly. To the CMS, Mylan had ample information to understand their classification and financial requirements as a brand-name drug.

Why is there a question about Mylan’s patent in the first place?

Though it may sound straightforward to figure out, in the EpiPen’s case, the patent concept is uniquely complicated. The drug in an EpiPen is not patented. It’s actually just epinephrine – a natural hormone found in our bodies, but in concentrated form. Mylan’s patent for epinephrine expired many years ago, and there are other generic versions of epinephrine available to patients.

What Mylan actually has a patent on is the dispenser – the way the epinephrine enters the patient’s body. The device administers the medication intramuscularly – a route that is extremely efficient and effective for patients suffering from an allergic reaction.

As a result, companies can’t create a “generic” version of the EpiPen without breaking its patent, because a generic drug has to have the same “route of administration.” The patented dispenser is, in fact, the route of administration.

EpiPen’s dispenser patent has been around since 1973. Patents usually last for about twenty years; after that point, the patent expires and other companies produce generic brands. However, in the EpiPen’s case, they continue to make slight design changes to their patent.

Although there are no major design changes, it is enough for them to re-apply for a new patent license. This prolongs the patent company’s exclusive rights to the idea and prolongs massive profits.

Increase in price

With such a monopoly on the market, EpiPen has the ability to hike up prices as much as they want – and they’ve done just that. The prices have increased to the point that many Medicaid patients can no longer afford the allergy medicine they depend on, with no generic options to turn to. This can pose a huge health threat to patients with strong allergies.

Mylan CEO announced this summer that they would release their own generic version of the EpiPen to help with rising brand costs. However, the U.S. government has brought this case against Mylan as, according to their evidence, they had warned the company that their patent was no longer valid. If this is true, EpiPens will need to be sold as a brand-name drug – and will need to pay brand-name Medicaid rebates.

CMS is probing into Mylan’s company history to find why the prices of the EpiPen continue to skyrocket. Though CEO Branch states that the costs do not reflect the profits after all the manufacturing and developing costs, the CMS is not convinced. CMS wants to investigate exactly how large the miscalculation of rebates goes, as well as how many other drugs under Mylan have been misclassified.  This way they will be able to determine the full amount of money Mylan owes the U.S. government and its patients.

Once that estimate is determined, CMS members must also figure out how to get that money back.  This trial has a long road ahead of it. Hopefully, it will be able to bring better medical prices to the many patients currently unable to buy EpiPens.

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