Mylan (NSDQ:MYL) last week agreed to pay $465 million to settle claims that it underpaid Medicaid for its EpiPen auto-injector by misclassifying the device as a generic. Last week, the Centers for Medicare & Medicaid Services said it spent $797 million on the emergency allergy treatment between 2011 and 2015, including rebates.
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. Lawmakers were investigating whether Mylan made more than it should by classifying the device as generic, which has a minimum 13% rebate, compared to a minimum 23% for a branded drug.
The settlement does not include any finding of wrongdoing, Mylan said.
“This agreement is another important step in Mylan’s efforts to move forward and bring resolution to all EpiPen auto-injector-related matters. The agreement is in addition to the significant steps Mylan has taken in relation to EpiPen auto-injector over the past several weeks, including the unprecedented, pending launch of a generic version of EpiPen auto-injector and expansion of our patient access programs for this product. Entering into this settlement is the right course of action at this time for the company, its stakeholders and the Medicaid program,” CEO Heather Bresch, who last month testified at a congressional hearing about the company’s pricing strategy, said in prepared remarks.
“I am glad the Dept. of Justice pursued this so quickly,” Sen. Amy Klobuchar (D-Minn.) said in a statement. “If other drugs are misclassified, and surely EpiPen isn’t the only 1 … the taxpayers need to get their money back.”
“This settlement is a shadow of what it should be – lacking real accountability for Mylan’s apparent lawbreaking,” Sen. Richard Blumenthal (D-Conn.) added.
Mylan said in a regulatory filing last week that it will reclassify the EpiPen as branded in April 2017. The company also lowered its 2016 earnings outlook, saying it expects adjusted earnings per share of $4.70 to $4.90, down from $4.85 to $5.15.
The drugmaker reinforced its 2018 forecast and said it “remains committed” to its target of at least $6.00 in adjusted earnings per share in 2018.
Mylan’s shares dropped -10% to $42.64 apiece when the criticism began in August. The stock was trading at $38.90 per share in mid-morning activity today, up 0.03%.
