SoylentNews

Mylan Overcharged U.S. Government on EpiPens

posted by martyb on Thursday October 06 2016, @11:44AM   
from the shoulda-got-the-EpiPencils dept.

takyon writes:

If you're going to overcharge the U.S. government, you don't want to get caught:

Mylan NV for years overcharged the U.S. Medicaid health program to buy its EpiPen shot, the government said Wednesday, despite being told that it needed to give bigger discounts under the law. From 2011 to 2015, the joint state-federal program for the poor spent about $797 million on EpiPens, the Centers for Medicare and Medicaid Services, or CMS, said in a letter Wednesday. That included rebates of about 13 percent, but the U.S. should have been getting a larger discount of at least 23.1 percent.

While the agency didn't say exactly how much Mylan had overcharged, the amount could be substantial. Under law, companies are required to give [Medicaid] back any price increases they take on brand drugs above the rate of inflation, in addition to the 23.1 percent discount. Mylan, after acquiring the drug in 2007, has raised the price of EpiPen by about sixfold, to over $600 for a package of two. The government has in the past "expressly told Mylan that the product is incorrectly classified," CMS said in the letter, which came in response to an inquiry by Congress. "This incorrect classification has financial consequences for the amount that federal and state governments spend because it reduces the amount of quarterly rebates Mylan owes for EpiPen."

Previously:
EpiPen's Price Increased 400% since 2008
AllergyStop: $50 EpiPen is Production-Ready but...

---

Original Submission

• Re:A Complex, not cut and dry situation. (Score: 2) by martyb on Thursday October 06 2016, @07:44PM

  by martyb (76) on Thursday October 06 2016, @07:44PM (#411222) Journal

  I think it can be explained much more simply: Greed.

  Agreed.

  I guess the government getting them cheaper is a good thing, but why are they so damn expensive in the first place? Yeah yeah, make back the cost of research. The proprietary part is an *injector* for crying out loud, not a genetically-engineered cloned superchimp or something. How long ago did they first release them? Talk about your payback periods. . . . Presumably they'd say that they still need that income to research all their other massively overpriced new drugs.

  From what I can tell, their research costs for the EpiPen have long since been paid for; from CNBC [cnbc.com]:

  [The] gap between cost and price have delivered some very nice revenue for Mylan, where EpiPen is a leading product. The company reported $9.45 billion in revenue for 2015 — up from $7.7 billion the year before — and $1.46 billion in income. A reported $1 billion in revenue comes from EpiPen, up from the $200 million in revenue at the time Mylan first acquired the devices.

  While Mylan has aggressively sought to expand the market for EpiPens by getting them placed in schools and trying to get them mandated for all airlines flying in the United States, the company didn't have to spend a nickel actually creating the product.

  The EpiPen was acquired by Mylan in 2007, along with other products from Merck.

  The device itself had been around decades before that. EpiPens were invented at a Maryland company called Survival Technology in the 1970s by engineers who included a man named Sheldon Kaplan.

  Originally called the ComboPen, the devices were bought by the U.S. Department of Defense for use in delivering medicine that would counteract the effects of nerve agents. Kaplan later tweaked the ComboPen to deliver epinephrine to counter the effects of anaphylaxis.

  See also Wikipedia's entry on the EpiPen [wikipedia.org] which notes:

  Autoinjectors were originally developed for the rapid administration of nerve gas antidotes in kits like the Mark I NAAK. The first modern epinephrine autoinjector, the EpiPen, was invented in the mid-1970s at Survival Technology in Bethesda, Maryland by Sheldon Kaplan[8][9] and was first approved for marketing by the FDA in 1987.[10]

  In 1996, Survival Technology merged with a company called Brunswick Biomedical and the new company was called Meridian Medical Technologies Inc..[11] In 1997, Dey, a subsidiary of Merck KGaA, acquired the exclusive right to market and distribute the EpiPen.[12][13] In 1998 there was a recall of one million EpiPens, the second such recall in a year.[14]

  In 2001 Meridian and Dey introduced a two-pack version of the EpiPen; at that time the device had $23.9 million in annual sales and accounted for 75% of the market in the United States.[15] In 2002 King Pharmaceuticals acquired Meridian for $247.8 million in cash;[16] the deal was completed in January 2003.[17] (King was later acquired by Pfizer in 2010 for $3.6 billion in cash.[18]) Kaplan continued to improve his designs over the years, filing for example US Patent 6,767,336 in 2003.[19]

  [...] In 2007, Mylan acquired the right to market the EpiPen from Merck KGaA as part of a larger transaction.[26] At that time annual sales were around $200 million[27] and the EpiPen had about 90% of the market.[28]

  --
  Wit is intellect, dancing.

  Parent

  Starting Score:	1		point
  Karma-Bonus Modifier		+1
  Total Score:		2