- Mylan N.V. will hand over $465 million to the U.S. government to settle a lawsuit alleging the company purposefully mischaracterized EpiPen as a generic drug so that it wouldn't have to pay higher Medicaid rebates.
- The company first agreed to the nearly half-billion-dollar settlement with the Department of Justice (DOJ) last October, but officially signed the agreement on Thursday. Neither Mylan nor its two subsidiaries that the lawsuit actually targeted, Mylan Inc. and Mylan Specialty L.P., have admitted wrongdoing.
- The Department of Health and Human Services (HHS) estimated it lost out on $1.3 billion worth of rebates between 2006 and 2016 because of Mylan's EpiPen classification; under the Medicaid Drug Rebate Program, branded medications are subject to larger rebates than generics.
Update: This article has been updated to include comments from Senator Chuck Grassley delivered in a statement August 17.
While $465 million is nothing to balk at, it's surely a sigh of relief for Mylan. That's because, when the HHS revealed its $1.3 billion in EpiPen overcharges, it appeared as though Chuck Grassley, a Republican Senator from Iowa and the chairman of the Senate Judiciary Committee, wasn't about to let the company settle.
In fact, he called out Mylan for not providing records of discussions between it and the Centers for Medicare and Medicaid Services (CMS) about EpiPen's misclassification, and hinted that deeper investigations into Mylan's business practices may be needed.
"Mylan was made aware of the misclassification years ago but did nothing," Grassley said in a May 31 statement. "It looks like Mylan overcharged the taxpayers for years with the knowledge EpiPen was misclassified, and the previous administration was willing to let the company off the hook. The fact that Mylan is unwilling to cooperate and provide documents voluntarily makes me wonder what there is to hide and whether a subpoena is the only way to get to the bottom of this."
In an Aug. 17 statement, Grassley wasn't appeased by the settlement.
"There are serious problems here. It looks like the settlement amount shortchanges the taxpayers," he said in the statement. "The Justice Department doesn’t say how it arrived at $465 million for a similar time period. Did the Justice Department consider the inspector general estimate? If not, why not?"
Mylan has contended, however, that CMS classified EpiPen as a non-innovator, or generic, product since before the drugmaker acquired it 2007.
"Another problem is why CMS and Mylan did nothing about the misclassification until a lawsuit forced them to act," Grassley said in the Aug. 17 statement.
In early March, Mylan reported a substantial hit to its 2016 operational earnings due to the anticipated DOJ settlement. Even so, the amount of money EpiPen makes — albeit, from both government and non-government sources — is substantially larger. The drug earned roughly $1 billion annually since at least 2014, according to Mylan's most recent 10-K filing with the Securities and Exchange Commission.
"As we said when we announced the settlement last year, bringing closure to this matter is the right course of action for Mylan and our stakeholders to allow us to move forward," Mylan CEO Heather Bresch said in an Aug. 17 statement.
"Over the course of the last year, we have taken significant steps to enhance access to epinephrine auto-injectors, including bringing a solution to the fast-changing healthcare landscape in the U.S. by launching an authorized generic version at less than half the wholesale acquisition cost of the brand and meaningfully expanding our patient access programs," she added.
Mylan isn't completely done with the DOJ, though.
Included in the settlement is a five-year corporate integrity agreement with the HHS' Office of Inspector General that includes a provision requiring an independent organization to review each year Mylan’s business practices as they pertain to the Medicaid Drug Rebate Program.
"Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules," Acting U.S. Attorney William Weinreb said in an Aug. 17 statement from the DOJ. "We will continue to root out fraud and abuse to protect the integrity of Medicaid and ensure a level playing field for pharmaceutical companies."
Interestingly, Sanofi will take home $38.7 million from the settlement. The Swiss drugmaker, which also develops an EpiPen competitor product, Auvi-Q, filed the initial qui tam complaint against Mylan in 2016.