October 21, 2016

Senator Warren Raises Concerns about DOJ Settlement with Mylan for Medicaid Fraud

Text of the letter available here (PDF)

Washington, DC - United States Senator Elizabeth Warren today sent a letter to Attorney General Loretta Lynch raising serious concerns about the recently announced Department of Justice (DOJ) settlement with Mylan Pharmaceuticals for charges related to its misclassification of EpiPen in order to avoid paying hundreds of millions of dollars in rebates owed to the Medicaid program.

The Medicaid drug rebate program requires manufacturers to pay rebates on brand-name and generic drugs and is designed to protect taxpayers from the high costs of prescription drugs. Last month, the Centers for Medicare & Medicaid Services (CMS) released information indicating that for years, even after being "expressly" warned, Mylan incorrectly classified EpiPen as a generic drug rather than a brand-name drug.

Senator Warren's letter notes that because EpiPen's price has increased by 300 percent between 2011 and 2015, the brand-name rebate would be significantly higher than the generic rebate.  The letter reveals that new staff estimates based on publicly available information indicate that Mylan underpaid rebates by an estimated $530 million.

The senator wrote, "if the terms of the agreement announced by Mylan are correct, Mylan wrongly classified EpiPen to maximize its Medicaid revenue, and did not change this classification despite being ‘expressly told' by CMS that it was wrong. The Justice Department has rewarded Mylan by imposing a fine that is about $65 million less than the amount Mylan made by defrauding Medicare and Medicaid.  In addition, you permitted Mylan to avoid admitting any admission of wrongdoing, collected no additional penalties under the False Claims Act, and blocked other actions against the company that would have required greater accountability. This settlement is shockingly soft on this corporate wrongdoer."

She continued, "The Justice Department has extensive tools available to hold a company like Mylan accountable... But it appears that none of these penalties was used against Mylan or its senior executives. Your department's limp response to Mylan's deliberate fraud raises a serious question about exactly how you plan to police other companies if you approve settlements that show that crime does pay." Senator Warren asked that the Justice Department brief her staff on the settlement.

A PDF copy of today's letter is available here.