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American taxpayers may have been overcharged by as much as $1.27 billion over a decade for the anti-allergy device EpiPen, a U.S. senator said Wednesday.
That amount is far more than the $465 million that EpiPen's owner, the big drugmaker Mylan, said that it agreed to pay the federal government last year to settle claims that it overcharged the nation's Medicaid system for the devices.
Mylan had for years classified EpiPen as a generic drug, which pays Medicaid a lower rate for rebates than is paid by brand-name drugs.
EpiPen, which is used to counteract a potentially fatal allergic reaction known as anaphylaxis, is supposed to be a brand-name product for Medicaid's drug rebate program, officials have said. Medicaid is the joint federal-state program that provides health-care coverage to primarily low-income Americans.
Sen. Chuck Grassley, R-Iowa, said he learned of the large disparity between Mylan's settlement amount and the potential overpayment by the government from the Department of Health and Human Services' Office of Inspector General after asking officials for an accounting of overcharges by Mylan for EpiPen.
Grassley also said that the federal Centers for Medicare and Medicaid Services recently provided records to the Senate that show "CMS told Mylan on several occasions that the EpiPen was misclassified" as a generic drug for the purposes of Medicaid's rebate program, "yet Mylan failed to correct the classification."
A Mylan spokeswoman had no immediate comment on Grassley's statement, or the claim that HHS's inspector general had said that taxpayers may have paid $1.27 billion more than they should have for EpiPen.
Mylan faced strong public criticism last year for hiking the price of EpiPen to more than $600 for a two-pack.
Amid that controversy, a number of elected officials questioned whether Medicaid had been receiving the correct amount of rebates from Mylan for EpiPen sales within that program. Mylan had repeatedly denied underpaying the rebates, but then agreed to a settlement with the Justice Department to resolve such claims, and also agreed to treat EpiPen as a brand-name product this year for the purpose of rebates.
"The fact that the EpiPen overpayment is so much more than anyone discussed publicly should worry every taxpayer," said Grassley, chairman of the Senate Judiciary Committee.
"Mylan and the Obama administration reportedly were close to settling the overpayment for much less than $1.27 billion," he said.
"CMS recently provided records to the committee that show Mylan was made aware of the misclassification years ago but did nothing," Grassley said. "It looks like Mylan overcharged the taxpayers for years with the knowledge EpiPen was misclassified, and the previous administration was willing to let the company off the hook."
"The fact that Mylan is unwilling to cooperate and provide documents voluntarily makes me wonder what there is to hide and whether a subpoena is the only way to get to the bottom of this."