Mylan (NSDQ:MYL) said today that it inked a $465 million deal with U.S. Dept. of Justice to settle claims that it misclassified its EpiPen allergy auto-injector device with the Medicaid Drug Rebate Program.
In October last year, The Centers for Medicare & Medicaid Services said that Mylan had been overcharging Medicaid for its EpiPen device for years, despite being warned that it should have paid bigger rebates.
CMS said that between 2011 and 2015, Medicaid spent $797 million on the epinephrine auto-injector after deducting rebates, marking the 1st time the federal agency has revealed how much it spent on the device. CMS revealed that Mylan misclassified the device as a generic, allowing the company to pay a 13% rebate instead of the 23% allocated for brand-name products
Mylan has previously defended its actions with a 1997 letter from the Medicaid Drug Rebate program written to Dey Laboratories, which Mylan acquired in 2007. The letter noted that the EpiPen could be considered a “non-innovator” or generic product. Politicians have pushed back on this, saying that Mylan had plenty of time to review its regulatory status.
In its settlement, Mylan did not admit any wrongdoing. The company said it plans to reclassify its auto-injector as a branded product with the Medicaid Drug Rebate Program and that it will pay the 23% rebate, effective April 1, 2017.
The DOJ investigation followed a False Claims Act lawsuit filed by rival drugmaker Sanofi Aventis (NYSE:SNY) in 2016, according to Reuters. In connection with the settlement, Sanofi is slated to receive $38.7 million as a reward.
“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,” CEO Heather Bresch said in prepared remarks. “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. 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.”
The Canonsburg, Pa.-based company has been under fire since August, when reports surfaced that it raised the price of its EpiPen product by more than 500% over the past decade. Mylan has since launched a generic version of its emergency allergy device, which sells at $300 per two-pack – a 50% discount on the price of its EpiPen device.