Mylan's rebate grace period for EpiPens raises questions

While Mylan agreed to settle its Medicaid rebate case with the federal government last week for $465 million, the drugmaker is not required to classify EpiPens as a branded drug under Medicaid's rebate program until April 2017, reports CNBC.

At present, Mylan only pays a 13 percent rebate for every EpiPen sold under CMS' rebate program. When EpiPens are classified as a branded drug, the company will pay a 23.1 percent rebate to Medicaid.

Neither Mylan nor the government have detailed the terms of the settlement, leaving many industry experts and leaders to question the reasoning behind the grace period.

Sen. Amy Klobuchar (D-Minn.), a vocal critic of Mylan, said she had "serious concerns" about the grace period, "especially since Mylan has been paying incorrect rebates for close to 10 years," reports CNBC.

Senator Chuck Grassley (R-Iowa), sent a letter Tuesday to U.S. Attorney General Loretta Lynch asking for further information about the settlement and grace period.

"Given that CMS has said Mylan misclassified its EpiPen, why is Mylan not required to reclassify the EpiPen immediately?" Sen. Grassley wrote in the letter. "An immediate reclassification would help prevent Mylan from further overcharging the states under the Medicaid Drug Rebate Program."

While CMS did not disclose how much it overpaid for EpiPens due to the misclassification, recent figures show federal health plans spent more than $1 billion on EpiPens from 2011 to 2015. Umer Raffat, a senior managing director and analyst at Evercore ISI, believes the grace period could cost Medicaid an additional $120 million, according to the report.

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