Report: Defense Department Overpaid $54 Million For EpiPens

It looks like taxpayers didn’t just overpay for EpiPens purchased through Medicaid. According to a new report, the Department of Defense has been paying almost full retail price for the expensive emergency allergy treatment.

This is according to a Reuters analysis of available data, which found that many of the EpiPens paid for by the DoD were purchased at retail pharmacies instead of military facilities or by mail order. That means the DoD’s deep discount on the drug did not apply.

When EpiPens were purchased at retail stores, Reuters says the DoD paid an average price that was up to three times higher than the discounted rate for buying the drug at a military facility. That wouldn’t be that much of a problem if it were only a small number of patients buying EpiPens at the higher price, but Reuters reports that nearly half of these drugs were bought at retail.

Between the drug’s soaring price hikes and the increased demand for EpiPen, DoD annual spending on the allergy treatment jumped from $9 million in 2008 to $57 million in 2015.

Reuters estimates that the DoD paid $54 million during those years for EpiPens that could have been purchased for significantly less money.

The drug’s maker, Mylan, tells Reuters that it’s talking to the Pentagon about extending the DoD’s discount to purchases made at retail pharmacies.

The DoD’s EpiPen situation appears to be different than the hundreds of millions of dollars overpaid for the drug by the Center for Medicare & Medicaid Services (CMS). That dispute involved the proper classification of EpiPen in the Medicaid rebate program.

Under that program, generic or multiple-source drugs pay a smaller rebate rate to Medicaid compared to the rebates paid for patent-protected drugs or medications with no competition. For decades, EpiPen was categorized as a multiple-source drug, meaning Mylan (and the companies that previously owned the EpiPen brand) were paying the lower rebate rate.

CMS recently concluded that the drug had been mis-categorized, meaning the government had lost out on hundreds of millions of dollars in rebates from Mylan. Almost immediately after CMS revealed this overpayment, Mylan says it agreed to a $465 million settlement with the Justice Department — a settlement the DOJ has yet to discuss publicly.

EpiPen may soon get lower-price competition, both from a generic version of the drug it plans to release on its own and from Sanofi’s Auvi-Q epinephrine injector. That drug was recalled from the market in Oct. 2015 over concerns about inaccurate dosing, but is slated to return in 2017.

by Chris Morran via Consumerist