The EpiPen Fine

By Henry Ehrlich
The New 12 months has simply begun and we have already got a brand new EpiPen story to ring it in. This one is in regards to the $465 million nice that Mylan paid final 12 months to Medicaid, which was mentioned in an article printed in FiercePharma by Eric Palmer about “misclassification” of medicine bought via Medicaid.
The economics of drug costs have all the time been a little bit of a thriller to me and this explicit article had its personal little puzzles so I wrote on to Mr. Palmer and requested him to elucidate what it was all about.
He wrote again: “It’s merely that every one drugmakers pay Medicaid a rebate on their medication. If the medication are labeled by the FDA as innovator medication, the rebate is 23.1%. If they’re merely generics, copies of another person’s innovator medication, they pay 13% of their gross sales again to Medicaid. The FDA labeled EpiPen as an innovator drug however Mylan reported it to Medicaid as a generic, and so paid about 10% much less in rebates on the gross sales than it ought to have.”
How profitable is that distinction? The truth that Mylan has raised the value steadily for years complicates the dialogue, however 23 p.c at at the moment’s worth of about $600 would imply kicking again about $140 to Medicaid. 13 p.c means solely $78. An important determine is that $1.27 billion was earned on the differential from 2006-2016, a few of it earlier than Mylan acquired Epipen, and solely $465 million was recouped in fines. Good work if you will get it.
For me this begs the query, by what inverted logic is EpiPen labeled as revolutionary? Epinephrine itself is a commodity drug and that autoinjector remains to be a lot because it was when the US army paid to create it a few years in the past. Nonetheless, Mylan tweaks it at times to remain a step forward of the patent workplace, though as we now have famous in these pages earlier than, they don’t fiddle fairly sufficient to make them protected to make use of or guarantee their effectiveness). Additionally they use their market clout to cost it like a brand new drug.
One selection tidbit I discovered whereas taking a look at this case was that Sanofi–former makers of Auvi-Q–bought a $38-million whistleblower payoff from the $465 million for tipping off the Feds that Mylan was taking part in the misclassification recreation.
If it’s any reassurance to you as a taxpayer, the bigger level of Palmer’s article was that such misclassification is uncommon. A research by the Inspector Common of the US Division of Well being and Human Companies discovered that remarkably few medication have been misclassified–three% of the 30,000 analyzed. Solely 4 drug makers have been answerable for greater than half of misclassifications and simply two of the medication accounted for 90% of misplaced income.
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