Despite a $465 million settlement with the U.S. Justice Dept., Mylan (NSDQ:MYL) is still under fire for misclassifying its EpiPen auto-injector with the Centers for Medicare & Medicaid Services. Last week, the Securities & Exchange Commission’s enforcement division launched an investigation into the Canonsburg, Pa.-based company’s history with CMS; yesterday investors filed a purported class action seeking compensation for damages.
The lawsuit was filed in a New York district court, claiming that Mylan knowingly misled investors and issued false and misleading statements about the emergency allergy treatment. The group is seeking “compensation for all those who purchased or otherwise acquired Mylan N.V. ordinary shares and/or Mylan Inc. common stock” between February 2013 and October 2016.
The investors are questioning “whether defendants acted knowingly or recklessly in issuing false and misleading SEC filings and public statements during the class period; whether the prices of Mylan N.V. ordinary shares and the prices of Mylan Inc. common stock during the class period were artificially inflated because of the defendants’ conduct complained of herein; and whether the members of the class have sustained damages and, if so, what is the proper measure of damages,” according to court documents filed yesterday.
Mylan has been scrutinized by lawmakers over the last 2 months, including at a Congressional hearing in which CEO Heather Bresch maintained that Mylan is committed to making the lifesaving treatment available to any patient that needs it. The company is developing a generic that will be offered for $300, half the current price of the brand name product.
CMS reported last week that it spent $797 million on the EpiPen between 2011 and 2015, including rebates. In the DoJ settlement, Mylan said it will reclassify the EpiPen as a branded drug beginning in April 2017, which means the company will pay 23% in rebates instead of 13%.
“The terms of the settlement do not provide for any finding of wrongdoing on the part of Mylan Inc. or any of its affiliated entities or personnel,” the company wrote in a regulatory filing last week. “The settlement terms provide for resolution of all potential rebate liability claims by federal and state governments as to whether the product should have been classified as an innovator drug for CMS purposes, and subject to a higher rebate formula.”
Mylan’s shares dropped -10% to $42.64 apiece when criticism began to mount in August. The stock was trading at $38.22 per share in mid-morning activity today, down -0.2%.