Mylan (NSDQ:MYL) is slated to pay $20.3 million to the Massachusetts Medicaid program to resolve claims that it underpaid the program by misclassifying its EpiPen device, according to attorney general Maura Healey.
“Mylan knowingly misrepresented this drug to MassHealth in order to underpay on rebates and make a profit at the expense of our state,” Healey said in prepared remarks. “This settlement brings critical funds back to our MassHealth program. Companies that receive payments from taxpayer-funded programs must be held accountable when they abuse this system.”
In August, the pharma company agreed to pay $465 million to the federal government and states to settle claims regarding the classification of its EpiPen device. With all states participating in the settlement, Mylan agreed to dish out $213.9 million to the states and the rest of the federal government.
Since the Medicaid program is funded by both the federal and state government, Massachusetts’ settlement of $20.3 million will be split, Healey explained – $7.9 million for the federal government and $12.4 million for the commonwealth.
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 explained that between 2011 and 2015, Medicaid spent $797 million on the epinephrine auto-injector after deducting rebates, marking the first time the federal agency has revealed how much it spent on the device. CMS also noted 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.