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Mylan's EpiPen Misclassified, Rebates Underpaid; Stock Down
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Mylan N.V. continues to take a hit, with shares currently down 4.7%, as a new issue drew the attention of lawmakers. A couple of U.S. congressional committee members have raised questions regarding Mylan’s payments to Medicaid for its severe allergy treatment, EpiPen.
EpiPen Misclassified as a Generic
In a letter to the secretary of the Department of Health and Human Services dated Sep 2, 2016, Senate Finance Committee Ranking Member Ron Wyden, and House Energy and Commerce Committee Ranking Member Frank Pallone, have sought further details regarding EpiPen’s classification and rebate obligations under the Medicaid drug rebate program, following revelations that Medicaid may have been grossly overpaying for EpiPen over nearly two decades due to a misclassification by Mylan.
The letter noted that while EpiPen was considered a branded drug in the new drug application to the FDA, it has been classified as a generic drug (also known as non-innovator multiple source drug) in the Medicaid program since at least 1997. This implies that Mylan has been vastly underpaying rebates owed to Medicaid for EpiPen for a long time. Apparently, instead of the 23.1% rebate for a branded drug, Mylan has been paying the much lower generic rebate of 13%.
However, in an e-mail, Mylan said that the company has complied with all laws and regulations regarding the Medicaid rebate classification of EpiPen.
Note that on Sep 1, U.S. Senator Amy Klobuchar had issued a statement related to the drug category misclassification of EpiPen. According to the letter, the Centers for Medicare & Medicaid Services (CMS) found that Mylan had misclassified EpiPen as a generic drug, leading to overpayment for the drug by the state and federal governments under the Medicaid drug rebate program. The Minnesota Department of Human Services has estimated that this misclassification will cost the state more than $4 million dollars this year alone.
In a letter dated Aug 31, U.S. Senators Amy Klobuchar, Chuck Grassley and Richard Blumenthal asked the CMS to provide information on the impact of Mylan’s price hike on government prescription drug costs.
Meanwhile, Senator Klobuchar has asked for an immediate and comprehensive nationwide investigation by the CMS into overpayments throughout the U.S.
Mylan’ shares are crashed almost 18% ever since the company came under scrutiny of several U.S. senators for the massive price hike of EpiPen in recent years. Democratic Presidential candidate Hillary Clinton had even posted a tweet saying “EpiPens can be the difference between life and death. There's no justification for these price hikes”, asking the company to lower costs immediately.
Mylan acquired EpiPen in 2007, following which it has hiked the price of a pack of two from $100 to the present level of approximately $600.
Amid harsh criticism from parents, consumers and lawmakers alike, Mylan tried to mitigate the situation by offering a savings card for up to $300, expanding the eligibility of its patient assistance program and announcing the upcoming launch of a generic EpiPen at a discount of over 50% on the branded product’s price.
Meanwhile, on Sep 2, Hillary Clinton unveiled a plan to protect consumers from “unjustified price hikes” of prescription drugs, including EpiPen. If elected, she proposes to create a dedicated group charged with protecting consumers from unreasonable price hikes and holding companies accountable, among other issues.
Horizon Pharma plc’s shares have also declined 4.2%. As per sources, the company could face a tough situation if Hillary Clinton's proposal is realized. Other companies like Endo International plc could also be at risk.
Mylan is currently a Zacks Rank #3 (Hold) stock. ANI Pharmaceuticals, Inc. (ANIP - Free Report) is a better-ranked stock in the health care sector, sporting a Zacks Rank #1 (Strong Buy).
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Mylan's EpiPen Misclassified, Rebates Underpaid; Stock Down
Mylan N.V. continues to take a hit, with shares currently down 4.7%, as a new issue drew the attention of lawmakers. A couple of U.S. congressional committee members have raised questions regarding Mylan’s payments to Medicaid for its severe allergy treatment, EpiPen.
EpiPen Misclassified as a Generic
In a letter to the secretary of the Department of Health and Human Services dated Sep 2, 2016, Senate Finance Committee Ranking Member Ron Wyden, and House Energy and Commerce Committee Ranking Member Frank Pallone, have sought further details regarding EpiPen’s classification and rebate obligations under the Medicaid drug rebate program, following revelations that Medicaid may have been grossly overpaying for EpiPen over nearly two decades due to a misclassification by Mylan.
The letter noted that while EpiPen was considered a branded drug in the new drug application to the FDA, it has been classified as a generic drug (also known as non-innovator multiple source drug) in the Medicaid program since at least 1997. This implies that Mylan has been vastly underpaying rebates owed to Medicaid for EpiPen for a long time. Apparently, instead of the 23.1% rebate for a branded drug, Mylan has been paying the much lower generic rebate of 13%.
However, in an e-mail, Mylan said that the company has complied with all laws and regulations regarding the Medicaid rebate classification of EpiPen.
Note that on Sep 1, U.S. Senator Amy Klobuchar had issued a statement related to the drug category misclassification of EpiPen. According to the letter, the Centers for Medicare & Medicaid Services (CMS) found that Mylan had misclassified EpiPen as a generic drug, leading to overpayment for the drug by the state and federal governments under the Medicaid drug rebate program. The Minnesota Department of Human Services has estimated that this misclassification will cost the state more than $4 million dollars this year alone.
In a letter dated Aug 31, U.S. Senators Amy Klobuchar, Chuck Grassley and Richard Blumenthal asked the CMS to provide information on the impact of Mylan’s price hike on government prescription drug costs.
Meanwhile, Senator Klobuchar has asked for an immediate and comprehensive nationwide investigation by the CMS into overpayments throughout the U.S.
MYLAN NV Price
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Developments So Far
Mylan’ shares are crashed almost 18% ever since the company came under scrutiny of several U.S. senators for the massive price hike of EpiPen in recent years. Democratic Presidential candidate Hillary Clinton had even posted a tweet saying “EpiPens can be the difference between life and death. There's no justification for these price hikes”, asking the company to lower costs immediately.
Mylan acquired EpiPen in 2007, following which it has hiked the price of a pack of two from $100 to the present level of approximately $600.
Amid harsh criticism from parents, consumers and lawmakers alike, Mylan tried to mitigate the situation by offering a savings card for up to $300, expanding the eligibility of its patient assistance program and announcing the upcoming launch of a generic EpiPen at a discount of over 50% on the branded product’s price.
Meanwhile, on Sep 2, Hillary Clinton unveiled a plan to protect consumers from “unjustified price hikes” of prescription drugs, including EpiPen. If elected, she proposes to create a dedicated group charged with protecting consumers from unreasonable price hikes and holding companies accountable, among other issues.
Horizon Pharma plc’s shares have also declined 4.2%. As per sources, the company could face a tough situation if Hillary Clinton's proposal is realized. Other companies like Endo International plc could also be at risk.
Mylan is currently a Zacks Rank #3 (Hold) stock. ANI Pharmaceuticals, Inc. (ANIP - Free Report) is a better-ranked stock in the health care sector, sporting a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>