(Bloomberg) — The state of West Virginia launched a Medicaid fraud investigation of Mylan NV by seeking to force the drugmaker to turn over documents related to its EpiPen treatment for allergic reactions.
State Attorney General Patrick Morrisey announced the probe and the case at a press conference in Charleston on Tuesday, the day before Mylan Chief Executive Officer Heather Bresch is to testify at a hearing before Congress. The company was founded in West Virginia and Bresch is the daughter of U.S. Senator Joe Manchin, a Democrat.
Mylan has been under the spotlight for weeks over the escalating price of its EpiPen, a life-saving allergy shot of epinephrine. The drugmaker acquired the rights in 2007, when it cost about $50 for a single EpiPen, according to SSR Health, and raised the price to $600 for a two-pack. Mylan dominates the market, and the drug accounts for 40 percent of its operating profits.
The company declined to comment on Morrisey’s records demand. Morrisey, a Republican, called Mylan’s failure to cooperate a violation of state law and said the company’s actions are “outrageous.”
Morrisey is seeking internal company files outlining rebates Mylan paid to participate in the state’s Medicaid program, according to a statement issued Tuesday. West Virginia officials are questioning whether Mylan paid rebate amounts typically associated with “non-innovator” drugs, even though brand-name drugs such as the EpiPen generally pay higher, “innovator” drug rebates.
U.S. law requires makers of drugs who have no approved competitors to pay a rebate of at least 23.1 percent of the average manufacturer price to participate in the Medicaid program. Generic drugs are subject to a 13 percent rebate.
Mylan, which operates a manufacturing plant in Morgantown, West Virginia, failed to turn over records when Morrisey’s investigators originally requested them in August, according to court filings.
Mylan officials countered that they couldn’t comply with the document request until after congressional hearings into the EpiPen price hike were completed, according to the filings.