Mylan finalizes settlement for EpiPen overcharging

Deal allocates money to Medicaid programs

The U.S. Justice Department on Thursday finalized its $465 million settlement with Mylan for overcharging Medicaid for the EpiPen, revealing that investigators were tipped off to the matter by a rival drug company.

The emergency allergy shot has been classified as a generic instead of a brand name drug for many years, allowing Mylan to pay lower rebates to Medicaid and resulting in states paying more for the product. Drug companies are responsible for ensuring that their products are correctly classified.

“Mylan misclassified its brand name drug, EpiPen, to profit at the expense of the Medicaid program,” said William D. Weinreb, acting U.S. attorney for Massachusetts. “Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules.”

Mylan, which had disclosed the settlement amount on a tentative basis in October, said it would reclassify the auto-

injector as a brand name, or innovator drug, and pay the higher rebates under the Medicaid Drug Rebate Program retroactive to April 1, 2017.

The classification issue was raised with the Justice Department in 2014 by French drugmaker Sanofi, which at the time was paying the higher rebates on its Auvi-Q epinephrine auto-injector. That device, which was pulled from the market in 2015 because of dosing concerns, was brought back in February by another French drug company, Kaleo.

In 2016, Sanofi filed a complaint against Mylan on behalf of the government under the False Claims Act, and the company will receive $38.7 million of the settlement, plus a share of the states’ recovery.

“We commend Sanofi for bringing this matter to our attention,” Mr. Weinreb said Thursday.

The settlement, which does not contain an admission of wrongdoing, “provides for resolution of all potential Medicaid rebate liability claims by the federal government, as well as potential claims by certain hospitals and other covered entities that participate in the [government’s discount] drug pricing program,” Mylan said in a news release.

The deal also “allocates money to the Medicaid programs of all 50 states and establishes a framework for resolving all potential state Medicaid rebate liability claims within 60 days,” the statement said.

Last fall, the preliminary settlement was criticized by lawmakers and others as being too low.

On Thursday, one of those critics, Sen. Chuck Grassley, R-Iowa, repeated his concerns.

“It looks like the settlement amount shortchanges the taxpayers,” he said in a statement, noting that the Department of Health and Human Services’ Office of Inspector General found the government may have overpaid for the EpiPen by as much as $1.27 billion over 10 years.

“The settlement is a disappointment. The agencies that are supposed to look out for taxpayers should not be pulling punches,” he said.

Mylan CEO Heather Bresch said in Thursday’s announcement that the settlement brings closure to the matter and “is the right course of action for Mylan and our stakeholders to allow us to move forward.”

As part of the deal, Mylan agreed to an annual outside review to ensure it is complying with the Medicaid rebate program.

Besides the Medicaid issue, Mylan faced widespread backlash last year for raising the price of the EpiPen by some 500 percent in recent years. The company, which is incorporated in the Netherlands but is run from executive offices in Cecil, responded by releasing a generic version that lists for half the price.