November 7, 2012—Drug manufacturer Mylan will soon be mailing refunds to 340B providers for overcharges on all products sold by its Dey Pharma subsidiary from late 1994 through late 2006, according to an announcement on the Office of Pharmacy Affairs (OPA) home page.
In its statement on the OPA Web site, Mylan said the need to provide refunds to 340B covered entities “arises from a recalculation of average manufacturer prices [AMPs] and best prices” reported by Dey Pharma to the Centers for Medicare and Medicaid Services (CMS) under the Medicaid rebate program.[ms-protect-content id=”2799″] Mylan purchased Dey Pharma in 2007 and renamed it Mylan Specialty in February 2012.
The Mylan 340B refunds will cover all products bearing NDC labeler code 495021 from the third quarter of 1994 through the fourth quarter of 2006. Past and present Dey Pharma/Mylan Specialty products with relatively high rates of utilization include the EpiPen and EpiPen Jr epinephrine auto-injectors as well as albuterol and albuterol/ipratropium nebulizer solutions.
Mylan said it has identified the providers it overcharged and will contact them by mail. “If any additional covered entities are identified, [Mylan Specialty] will make the same refund offer, provided that the Covered Entity can document that it purchased [Mylan Specialty] products during the relevant period and that it qualified as a covered entity at the time it made the purchase(s),” the company said.
Providers with questions about the refunds should contact Mylan Manager of Government Pricing & Reporting Terry Pierce by telephone at (304) 554-5256 or by fax at (304) 285-6402.
In late 2010 and early 2011, Mylan Pharmaceuticals mailed checks totaling $7.3 million to 340B providers in accordance with its October 2009 settlement with the U.S. Justice Department over allegations that it misclassified authorized generic drugs between 2000 and 2004 for purposes of Medicaid rebates and 340B drug discounts. The settlement also included Mylan’s UDL Laboratories subsidiary.
GSK Begins Issuing Checks
340B providers, meanwhile, have begun receiving checks from GlaxoSmithKline (GSK) for $20.2 million in overcharges covering the period 1994 through 2003 as part of a $3 billion global health care fraud settlement with the federal government. One safety-net health system reports receiving more than $125,000 from the company, another nearly $90,000, and a third nearly $70,000.
The government alleges that the company used bundled sales contracts to falsely claim that certain of its products were sold at “nominal cost,” defined as any price less than 10 percent of AMP for purposes of calculating a drug’s Medicaid rebate percentage. GSK excluded those transactions from its best price calculations. AMP and best price are, in turn, used to calculate 340B ceiling prices.
As a result, the government contends, GSK knowingly overcharged 340B covered entities, underpaid Medicaid rebates to the states, and caused the federal government to be overcharged for its contributions to state Medicaid programs.
In 2007, drug manufacturer Merck agreed to pay $671 million to resolve charges that it extended nominal prices to hospitals on its cholesterol-lowering drug Zocor and painkiller Vioxx if the hospitals used large quantities of those drugs in place of competitors’ brands. 340B covered entities received more than $9 million in the settlement. In 2004, Schering-Plough agreed to pay $345 million to settle various claims including allegations that the drug company offered price concessions to two HMOs from 1998-2002 in order to avoid lowering the Medicaid best price of Claritin. In accordance with the settlement, at least $10.6 million went to 340B entities affected by the best price violation.
Other Drug Pricing Lawsuits
In another legal action with potential 340B ramifications, proceedings continue in federal district court in Philadelphia in a whistleblower suit that alleges that four drug manufacturers—AstraZeneca, Biogen Idec, Cephalon, and Genzyme—knowingly underpaid Medicaid drug rebates by underreporting their products’ AMPs. In July, a federal district judge dismissed claims against nine other manufacturers named in the suit, U.S. ex rel. Streck v. Allergan (No. 08-5135) while allowing claims to proceed against four others based upon their conduct from 2007 forward. The original suit alleged misconduct dating back to 2004.
Proceedings also continue in federal district court in Boston in a pair of whistleblower suits alleging that drug manufacturer Wyeth (now owned by Pfizer) offered hospitals nominal pricing on the antacid Protonix Oral and reduced pricing on Protonix IV if they bought both products together under a bundled arrangement and attained certain market share requirements. The federal government and 16 states have intervened in the suits on the whistleblowers’ behalf. In November 2011, attorneys for Wyeth filed motions for summary judgment in its favor on all claims against it in the suit. The cases are U.S. ex rel. Kieff v. Wyeth (No. 03-12366-DPW) and U.S. ex rel. Lacorte v. Wyeth (No. 06-11724-DPW).[/ms-protect-content]