Mylan to pay $465 million over EpiPen
Medicaid rebate dispute
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[October 08, 2016]
By Deena Beasley
(Reuters) - Mylan NV <MYL.O> on Friday said
it will pay $465 million to settle questions of whether it underpaid
U.S. government healthcare programs by misclassifying its EpiPen
emergency allergy treatment, which has come under intense scrutiny after
a series of drastic price increases.
Mylan has been lambasted by consumers and lawmakers for raising prices
on the lifesaving EpiPen sixfold to over $600 for a package of two in
less than a decade, making the devices unaffordable for a growing number
of families.
Lawmakers were trying to determine whether Mylan made more money on
EpiPen than warranted from state Medicaid programs by having it
classified as a generic product, resulting in much smaller rebates to
the government health plans.
Mylan Chief Executive Heather Bresch was grilled by the House Committee
on Oversight and Government Reform for the price increase and they were
skeptical of her profit analysis of the product.
The Centers for Medicare and Medicaid Services, in response to a request
from U.S. Senator Amy Klobuchar of Minnesota, said this week that the
Medicaid plan for the poor spent $797 million on EpiPen between 2011 and
2015, including rebates provided by Mylan, or $960 million before
rebates.
![](http://archives.lincolndailynews.com/2016/Aug/26/images/ads/current/ldn_sda_062409.png)
Lawmakers have contended that Mylan underpaid Medicaid rebates by
misclassifying EpiPen as a generic instead of a branded drug. The
Medicaid rebate for a generic is 13 percent compared with a minimum 23.1
percent for a branded drug.
"I am glad the Department of Justice pursued this so quickly," Klobuchar
said in a statement. "If other drugs are misclassified, and surely
EpiPen isn't the only one ... the taxpayers need to get their money
back."
Senator Richard Blumenthal of Connecticut blasted the settlement as too
small and said Congress should investigate whether Mylan violated the
law. "This settlement is a shadow of what it should be - lacking real
accountability for Mylan’s apparent lawbreaking," he said in a
statement.
Mylan said in a regulatory filing on Friday that EpiPen will be
classified as a branded drug as of April 1, 2017.
Bresch told lawmakers this week that Mylan plans to launch a $300
generic version of EpiPen as soon as possible this year.
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![](../images/100816pics/news_s27.jpg)
EpiPen auto-injection epinephrine pens manufactured by Mylan NV
pharmaceutical company for use by severe allergy sufferers are seen
in Washington, U.S. August 24, 2016. REUTERS/Jim Bourg/File Photo
![](http://archives.lincolndailynews.com/2016/Aug/26/images/ads/current/pacesetter_lda_041116.png)
Mylan also lowered its 2016 earnings outlook, but the drugmaker
affirmed its 2018 forecast and its shares rose 11 percent to $39.90
after hours.
"Kudos to management for fast action," AB Bernstein analyst Ronny
Gal said in a video message to investors. "This was one of the major
risks everyone was focusing on ... now it is essentially off the
table."
Mylan said it will record a pretax charge of about $465 million in
the quarter ended Sept. 30. The company, which will make the payment
to the Department of Justice and other government agencies, said the
settlement does not include any finding of wrongdoing.
Mylan, citing changes to the EpiPen consumer discount program and
upcoming launch of a generic version, said it now expects full-year
2016 adjusted earnings per share of $4.70 to $4.90, down from $4.85
to $5.15.
Mylan said it "remains committed" to its target of at least $6.00 in
adjusted earnings per share in 2018.
(Reporting by Narottam Medhora in Bengaluru and Deena Beasley in Los
Angeles; additional reporting by Eric Beech in Washington; Editing
by Don Sebastian, Cynthia Osterman and Bernard Orr)
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