Senator: EpiPen Manufacturer Ripped Off the US Government for $1.27 Billion
For people with severe allergies, having an EpiPen can mean the difference between life and death. Because there’s no generic alternative, EpiPen manufacturer Mylan just keeps jacking up the price and ripping off patients. They also seem to have ripped off the government. Today, a probe by the Department of Health and Human Services concluded that the company actually stiffed taxpayers for three times more than was previously believed.
Back in October, Mylan agreed to pay the US government $465 million without admitting any wrongdoing. It was the end of a long saga that showed what a vile company Mylan is and it was quickly rewarded with a bounce in its stock price. Senator Chuck Grassley released the findings of the HHS report today and he’s indicating that the final price that Mylan will need to pay may not be settled yet. “Mylan and the Obama Administration reportedly were close to settling the overpayment for much less than $1.27 billion,” Grassley writes in the statement. “Taxpayers have a right to know what happened here and to be repaid whatever they are owed.”
Mylan had a pretty great scheme going. EpiPens went from costing $57 in 2007 to costing around $600 in 2016. Without a generic version on the market, the company could name their price. But they also appear to have taken advantage of reimbursement rates with Medicare and Medicaid. By law, pharmaceutical companies have to reimburse 13 percent of the total cost of a generic drug that’s paid for by one of the programs. Name brand drugs have to reimburse 23.1 percent. Mylan classified the EpiPen as generic and now Uncle Sam is calling.
The late afternoon news dropped the stock price of Mylan by 1 percent and tomorrow’s trading will show just how big a deal for the company this problem will be in the short term. Shareholders are pissed and a group of four institional investors are calling for six directors of the company to be blocked from reelection. The investors say that the directors have caused Mylan “significant reputational and financial harm.” According to the Associated Press, share prices fell 10 percent over the last 12 months. But Chairman Robert Coury made off with $160 million in compensation in 2016. It seems unlikely that fresh appearances in front of Congress will help the value of the company.
[Reuters, Associated Press via Ars Technica]