Mylan Reaches $465M Settlement on EpiPen Misclassification Charges

October 16, 2016

Mylan will pay $465 million to settle claims that the company misclassified its epinephrine auto-injector EpiPen for the Medicaid Drug Rebate program, allowing it to pay lower reimbursement rate to states for almost a decade.

The company reached the agreement — which nearly totals the amount Medicaid and Medicare spent on the allergy treatment in 2015 — with the Department of Justice and other government agencies, Mylan said.

The agreement includes no admission of wrongdoing and clears Mylan of “all potential rebate liability claims by federal and state governments” regarding the emergency allergy treatment’s classification as a non-innovator drug or generic.

The Centers for Medicare and Medicaid Services (CMS) confirmed the company paid a generics rebate of 13 percent for its EpiPen, instead of the brand-name rebate of 23.1 percent, through a misidentification that has spanned nearly two decades, and predates Mylan’s acquisition of the device in 2007. CMS added that it notified the company of the misclassification “on multiple occasions.”

Starting in April of next year, however, the EpiPen will be categorized as a brand-name product under the drug rebate program, which means the company will be subject to the higher rebates, Mylan said.

Corporate Integrity Agreement

As part of the settlement, Mylan will also reach a corporate integrity agreement with HHS’s Office of the Inspector General.

In a statement, Mylan CEO Heather Bresch said the settlement is among the company’s several efforts to “move forward and bring a resolution to all the EpiPen auto-injector matters,” noting the company’s plan to launch a generic and introduce savings cards worth up to $300.

The announcement comes after members of the House and Senate called on Mylan and CMS to explain the misidentification. Most recently, Sen. Charles Grassley (R-Iowa) penned letters to Mylan and CMS requesting all communications related to the EpiPen classification.

The Securities and Exchange Commission’s Division of Enforcement is looking to examine similar communications between CMS and Mylan, asking the company to hand over all documents related to product coverage under the drug rebate program, not just the EpiPen.

Grassley Seeks Details

Grassley also sent a letter to Attorney General Loretta Lynch asking for additional information about the settlement.

In the letter, Grassley called on the department to be more transparent about the agreement, noting that very few details have emerged. He specifically asked Lynch to explain why the reclassification as a brand-name product won’t take effect immediately.

Additionally, Grassley questioned whether states will be reimbursed for the rebate amounts the company neglected to pay due to the misclassification. He also asked for a detailed breakdown of where the settlement funds will be allocated.

In Congress, Grassley is co-sponsoring two bipartisan bills aimed at ensuring that generic and biosimilar competition can drive down the price of brand-name products like Mylan’s EpiPen.

The first bill is the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act, which is intended to prevent drugmakers from keeping generics or biosimilars off the market by denying access to drug samples used to develop the copycat products, Grassley said.

The second bill is Preserve Access to Affordable Generics Act, which would keep drugmakers from entering pay-off agreements, commonly known as pay-for-delay settlements, with generics makers to postpone the launch of equivalent products. — José Vasquez