The U.S. Attorney’s Office announced today that Mylan has settled a False Claims Act violation dispute.
Mylan, the maker of EpiPen, was accused of defrauding and abusing the Medicaid system. According to the U.S. Attorney’s Office, they incorrectly labeled EpiPen as a generic product which allowed them to avoid paying the higher Medicaid rebates to which branded drugs are subject. The Office said that, at the time, there were no FDA-approved alternatives and Mylan marketed and priced the drug as a branded medication.
“Mylan misclassified its brand name drug, EpiPen, to profit at the expense of the Medicaid program,” said Acting United States Attorney William D. Weinreb in a statement. “Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules. We will continue to root out fraud and abuse to protect the integrity of Medicaid and ensure a level playing field for pharmaceutical companies.”
The issue came to the Attorney’s Office through Sanofi, a manufacturer of the rival epinephrine auto-injector AUVI-Q. Sanofi filed a formal complaint in 2016 under the qui tam provisions of the False Claims Act, which entitles them to a share of recovery. Under the settlement, Sanofi will receive $38.7million from the federal recovery, along with a share of recovery from states.
Mylan will pay $465 million to resolve the dispute. The money will be allocated to Medicaid programs in all 50 states, and provides a framework for resolving all potential state Medicaid rebate liability claims within 60 days, according to a Mylan press release. The Attorney’s Office also added that Mylan will be required to allow an independent review organization to review Mylan’s practices related to the Medicaid drug rebate program annually.
Heather Bresch, CEO of Mylan, said in the press release, “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.”
Mylan stocks jumped up on the day of the announcement, from $30.3 to as high as $31.11.