TRENTON, N.J. – Mylan Pharmaceuticals has finalized a $465 million settlement in a lawsuit that claimed it overbilled Medicaid for its emergency Epinephrine auto-injectors for at least 10 years.
The charges against Mylan were brought after Sanofi filed a whistleblower lawsuit in federal court.
The $465 million settlement is the second settlement with the U.S. Department of Justice that the pharmaceutical company has made since 2009 for alleged overcharging.
Mylan raised the price of a twin-pack of EpiPens from $94 in 2007 to $608 last year. Experts estimate the cost to produce one EpiPen is less than $10.
Mylan agreed to resolve claims that they violated the False Claims Act by knowingly misclassifying EpiPen as a generic drug to avoid paying rebates owed primarily to Medicaid, according to a DOJ press release
“This settlement demonstrates the Department of Justice’s unwavering commitment to hold pharmaceutical companies accountable for schemes to overbill Medicaid, a taxpayer-funded program whose purpose is to help the poor and disabled,” said Acting Assistant Attorney General Chad A. Readler of the Department of Justice’s Civil Division. “Drug manufacturers must abide by their legal obligations to pay appropriate rebates to state Medicaid programs.”
Acting U.S. Attorney William D. Weinreb said Mylan misclassified its brand name drug, EpiPen, to profit at the expense of the Medicaid program.
“Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules,” Weinreb said. “We will continue to protect the integrity of Medicaid and ensure a level playing field for pharmaceutical companies. ”
Congress enacted the Medicaid Drug Rebate Program to ensure that state Medicaid programs were not susceptible to price gouging by manufacturers of drugs that were available from only a single source.
It subjected such single-source, or brand name drugs, to a higher rebate that is payable to Medicaid and that increases to the extent the price of the drug outpaces the rate of inflation.
In contrast, generic drugs originating from multiple manufacturers are subject to lower rebates that, at least until recently, were not subject to inflationary adjustments.
The settlement resolves the government’s allegations that Mylan, by erroneously reporting EpiPen as a generic drug to Medicaid despite the absence of any therapeutically equivalent drugs, was able to demand massive price increases in the private market while avoiding its corresponding rebate obligations to Medicaid.
Between 2010 and 2016, Mylan increased the price of EpiPen by approximately 400 percent yet paid only a fixed 13 percent rebate to Medicaid during the same period.
The government further alleged that although Mylan was well-aware that its drug was not a generic, it nevertheless claimed generic status for EpiPen in the Medicaid program to avoid paying a higher rebate.
Mylan has also entered into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General that requires, among other things, an independent review organization to annually review multiple aspects of Mylan’s practices relating to the Medicaid drug rebate program.
“Our five-year corporate integrity agreement requires intensive outside scrutiny to assess whether Mylan is complying with the rules of the Medicaid drug rebate program,” said Gregory E. Demske, Chief Counsel to the Inspector General for the U.S. Department of Health and Human Services. “In addition, the CIA requires individual accountability by Mylan board members and executives.”
Mylan CEO Heather Bresch said in a press release that bringing closure to the matter is the right course of action for Mylan and its stakeholders to allow them to move forward.
“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,” Bresch said. “Mylan has always been committed to providing patients in the U.S. and around the world with access to medicine, and we look forward to continuing to deliver on this mission.”