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Thursday, 24 August 2017 03:31

Big Pharma Firm Gets Slap on the Wrist for Medicaid Fraud

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epipenThe story of EpiPen pricing reveals why drug costs should be controlled. Greg Friese)

You may remember the EpiPen scandal -- the massive price increases on the life-saving drug delivery system that saves people temporarily from allergic reactions -- from awhile back. In 2016, The Daily Take Team wrote on Truthout,

Dozens of reports are now coming out about how Mylan Pharmaceuticals hiked the price of the very common life-saving EpiPen by over 450 percent since Mylan bought EpiPen in 2007.

You've probably heard of EpiPens, and you probably know someone who needs to carry two around with them at all times, just in case they have a severe allergic reaction as a result of some everyday occurrence -- for example, encountering a food product with peanuts or being stung by a bee....

But it's not the epinephrine that makes EpiPens unique, it's the precision delivery system, the "Pen," that makes the product special. And that delivery system really hasn't changed since 1977 when the EpiPen hit the market. So why has the price more than quadrupled since 2007? Why are patients who need this medicine currently paying $600 for two pens?

Because of the greed at Mylan Pharmaceuticals, plain and simple.

Mylan Pharmaceuticals did not confine their price gouging to individual consumers who required the EpiPen for survival. According to Public Citizen, a Washington, DC-based progressive advocacy group, the company also defrauded the federal government, as noted in a news release this month. Robert Weissman, president of Public Citizen, scathingly attacked a recent government settlement with Mylan for cheating the Medicaid program:

Mylan ripped off the government big time, and the U.S. Department of Justice [DOJ] is letting the company get away with it. Mylan misclassified EpiPen in such a way as to provide less generous discounts to Medicaid purchasers than the law requires. A government investigation concluded that as a result of the classification, Medicaid programs paid $1.27 billion more for EpiPens than they should have between 2006 and 2016.

Today's shameful settlement is for barely a third of the amount of the rip-off, and it fails to include an admission of guilt – an appalling omission for a decade-long scheme that enabled Mylan to fatten its bottom line by more than a billion.

A June 22 article on Truthout indicates that allowing drug companies to benefit at the expense of the poor appears to be an objective of the Trump administration. Professor Fran Quigley wrote for Truthout in June that a Trump executive order on drug pricing will hit the poor especially hard:

Instead, in an audacious example of blaming the victim, the draft order takes aim not at the industry whose profits rival those of banks and oil companies, but at low-income patients, both in the US and in developing countries. The proposal calls for restrictions on the 340B Drug Pricing Program, in which pharma corporations that benefit from the lucrative Medicaid market for their drugs are required in return to give some discounts to hospitals and clinics that serve low-income patients....

Not only are such measures mean-spirited, they would also be completely ineffective at reducing medicine prices for US patients. Rolling back limited drug price discounts for the poor would only increase revenue for pharmaceutical corporations that have a proven track record of directing their dollars into marketinglobbying and breathtakingly high CEO pay, not lowered prices.

In regard to the Department of Justice settlement with Mylan, Sen. Chuck Grassley (R-Iowa) questioned why the fine that Mylan had to pay amounted to much less than the profit it made from the fraud. According to CNBC,

The $465 million settlement that big drugmaker Mylan agreed to pay to pay settle claims it grossly underpaid Medicaid rebates for EpiPen "shortchanges the taxpayers," Sen. Chuck Grassley said Thursday.

"There are serious problems here," said Grassley, R-Iowa, about the finalized settlement related to the anti-allergy device EpiPen announced earlier Thursday, which will split the money between the federal government and state Medicaid programs.

"The government's own watchdog said the taxpayers may have overpaid for EpiPen by as much as $1.27 billion over 10 years," Grassley said.

Sen. Richard Blumenthal (D-Connecticut), CNBC reports, characterized the settlement as "completely insufficient."

AllergyKids Foundation founder Robyn O'Brien charged, "If you were to ask any family who was part of the price gouging that Mylan participated in, they would tell you that it's not enough because the families aren't seeing any rebate, they are not seeing any recourse, they are not seeing any refund for the incredible overcharging that Mylan did over the last several years. And I think $465 million for a company that has $11 billion in annual revenue is not enough."

I have written numerous commentaries over the years on how the Department of Justice continually settled with Wall Street banks for fraud and deceptive practices that led to the 2008 implosion. Inevitably, the DOJ allowed the banks to pay fines that amounted to less than the money that they made through their illegal behavior. Furthermore, the DOJ did not, for the most part, hold any individual responsible for the illicit actions, ban the responsible individuals from continuing to work in the finance industry or require much in the way of changes in institutional practices.

In analyzing this month's DOJ settlement with Mylan Pharmaceuticals, it appears that the chief law enforcement agency in the United States is continuing to protect the profits of corporations over the interests of people in medical need -- including those for whom a prescription drug is a matter of life and death.