Grassley on the EpiPen: A Case Study in the Value of Oversight to Find Legislative Solutions
Statement by U.S. Senator Chuck Grassley of Iowa
Senate Finance Committee
EpiPen: A Case
Study in the Value of Oversight to Find Legislative Solutions
Monday, April 29,
like to call attention to an issue that has affected many families in Iowa and
throughout the country: the cost of prescription drugs.
cost of prescription drugs is an issue that comes up at almost every Q&A I
hold with Iowans at my annual 99 county meetings.
the last two months, I’ve started a bipartisan investigation with my colleague,
Ranking Member Wyden, into the pricing of insulin.
investigation extends to insulin manufacturers and pharmacy benefit managers.
need to find out how manufacturers price their insulin products.
we need to find out if pharmacy benefit managers are negotiating the lowest
drug price possible from manufacturers on behalf of insurance plans.
isn’t my first drug pricing investigation.
recent years, I’ve investigated Gilead’s pricing of its Hepatitis C drugs,
Sovaldi and Harvoni.
also investigated Mylan’s EpiPen price increase.
let me tell you, oversight works.
said it before, and I’ll say it again, Congress has a constitutional
responsibility to engage in robust and aggressive oversight of the federal
government and its programs.
EpiPen investigation is a perfect example.
years ago, I began to receive letters, phone calls, and emails from my
constituents about the high price of the EpiPen.
2007, a pack of two EpiPens cost $100. By 2016 it had skyrocketed to over $600.
was a substantial price increase.
I wanted to find out what was happening and what could be done to fix the
investigative and policy focus soon turned to the Medicaid Drug Rebate Program.
Medicaid Drug Rebate Program is a contributing factor that has played a part in
how much money the government and taxpayer pays for some drugs.
a condition for participation in the program, drug companies have to pay a
rebate to the federal government and states for the drugs they offer.
speaking, the rebate dollar amount is contingent on whether a drug is
considered a brand name drug or generic.
brand name drug pays a rebate of the greater of 23.1 percent of the average
manufacturer price or the difference between that and the drug’s best price.
rebate amount is raised if the average manufacturer price increased faster than
the rate of inflation.
generic drug’s rebate is 13 percent of the average manufacturer’s price.
the rebate program has not worked as designed.
companies have been able to game the system.
pay smaller rebates than they’re supposed to, and the taxpayer foots the bill.
is a perfect example of this.
me tell you how this works.
classified the EpiPen as a generic under the Medicaid Drug Rebate Program
rather than a brand name drug.
I asked CMS about that classification, they told me the EpiPen should not have
been classified as a generic.
of this incorrect classification, Mylan only had to pay a 13 percent rebate
instead of a 23.1 percent rebate.
means less money was returned to the federal taxpayers and the states.
to CMS, from 2011 to 2015, total Medicaid spending on EpiPen was $960 million.
rebates, net Medicaid spending was still approximately $797 million.
spending on EpiPen under those same years was $335 million.
taxpayers and the states were on the hook for these exorbitant overpayments for
the better part of a decade.
I saw what was happening, I asked the Health and Human Services Inspector
General to look into these practices
on data already on file, the Inspector General was able to calculate the
potential lost rebate value dating back to 2006.
Inspector General found that the taxpayers may have overpaid for the EpiPen by
as much as $1.27 billion over 10 years because of the incorrect classification.
Mylan settled a False Claims Act case with the Obama Administration’s Justice
Department for $465 million.
a far cry from how much Mylan got from taxpayers while it was pulling this
hundred million dollars less.
learning of the settlement, I expressed my extreme disappointment to the
just didn’t seem the taxpayers had been made whole.
to Attorney General Miller of Iowa, my home state received $1.5 million from
after repeated requests to justify how that amount made Iowa whole, he has
failed to provide an answer.
not only did Mylan’s steep price hike for one of the most widely needed drugs
in this country hit families hard, it also hit the taxpayers’ bottom line.
shouldn’t have to depend on lawyers and lawsuits to get taxpayer money back
agencies should be responsibly overseeing the programs that they’re in charge
the course of my investigation, it became clear that CMS didn’t believe it had
the legal authority to require drug companies to reclassify drugs and impose
civil monetary penalties for incorrectly classifying drugs.
for a few emails sent from CMS to Mylan’s representatives questioning the
EpiPen’s classification, for years it did nothing.
wasn’t doing its job and Mylan took advantage.
Inspector General has also stated that it lacked the legal authority to
affirmatively pursue penalties for the submission of inaccurate drug
as a result, Mylan was able to escape accountability for a long time, costing
taxpayers billions of dollars.
that’s just one case.
drug manufacturers are gaming the system, too.
a December 2017 report, the Inspector General found that 885 drugs may have
been potentially misclassified.
the Inspector General found that from 2012 to 2016, Medicaid may have lost $1.3
billion in rebates for 10 potentially-misclassified drugs with the highest
clear that the law needed to change to provide clarity on who has what
authorities and to hold the government and the private sector accountable.
a result of the findings in my EpiPen investigation, I, along with my colleague
Senator Wyden, drafted and Congress later passed the Right Rebate Act.
Act, which was passed with strong bipartisan support, fixes the problems that I
identified through my investigation.
closes the loophole that has allowed pharmaceutical manufacturers to
misclassify their drugs and overcharge taxpayers by billions of dollars.
provides the HHS secretary the authority to require drug manufacturers to
reclassify their drugs and impose civil monetary penalties when drugs are
provides HHS with additional authorities to monitor drug manufacturers who
participate in the Medicaid Drug Rebate Program.
it provides the states the ability to recover incorrect rebate amounts.
it imposes reporting and transparency requirements on HHS.
example, it requires the Secretary to submit a report to Congress on an annual
basis that describes:
covered drugs that have been misclassified, the steps taken to reclassify the
drugs, the actions the Secretary has taken to ensure the payment of any rebate
amounts which were unpaid, and an accounting of how any funds have been used
for oversight and enforcement of the new law.
of these fixes and updates are now in place because my constituents contacted
me about a real-world problem that was affecting their health and their
then instructed my oversight staff to investigate the problem.
acquired the evidence, uncovered the facts, and exposed the holes in existing
I instructed my policy staff to take those findings to plug the holes and solve
the problem with new legislation, which is now law.
exactly how it should be done.
President, that is Oversight 101.
brings transparency, and transparency brings accountability.
works, plain and simple. And the Right Rebate Act is proof of that.
yield the floor.