Mylan, Department of Justice finalize $465 million settlement over EpiPen, Medicaid drug rebates

Mylan and Mylan Specialty will pay $465 million to settle allegations they knowingly misclassified renowned epinephrine auto-injector drug EpiPen as a generic drug to avoid paying Medicaid rebates in violation of the False Claims Act, the Department of Justice announced Thursday.

Both are wholly owned subsidiaries of Mylan N.V., a Dutch-registered company based in Canonsburg, Penn.

The Medicaid Drug Rebate Program shields state Medicaid programs from price gouging by from drug makers whose products are only available from one source, which are commonly known as brand-name drugs, by requiring their makers pay a higher rebate that includes any difference between the drug's current price and the price the drug would have had if its price had increased only at the general rate of inflation.  Generic drugs with multiple makers mean lower rebates that typically did not include an inflationary component.

[Also: Class action lawsuit filed against Mylan over price increases]

The government alleged that Mylan knowingly misclassified EpiPen as a generic for the specific purpose of avoiding paying the higher Medicaid rebates, even though there weren't any FDA-approved therapeutic equivalents for EpiPen and it had been marketed and priced as a brand-name drug, the DOJ said.

Mylan raised the price of EpiPen by approximately 400% between 2010 and 2016, causing widespread backlash and spawning some generic alternatives, including one offered by Mylan.

In addition to the massive monetary settlement, Mylan has also entered into a corporate integrity agreement with the HHS Office of the Inspector General for a yearly review of various aspects of Mylan's practices related to the Medicaid drug rebate program.

Sanofi, one of Mylan's competitors, brought the matter to the United States Attorney's Office in 2014 as they were selling another epinephrine auto-injector drug called AUVI-Q. Sanofi was reporting their drug to the Medicaid Drug Rebate Program as a brand name drug.  In 2016, Sanofi filed a complaint against Mylan in 2016 under the whistleblower or qui tam provisions of the False Claims Act. As is permitted in such lawsuits, Sanofi will receive a portion of the recovery totaling $38.7 million, plus a share of the states' recovery.

[Also: Teva responds to Mylan backlash with planned launch of generic EpiPen]

Mylan said the EpiPen had been classified as a generic before 2007, when they acquired it, based on "longstanding written guidance" from the federal government.

"...bringing closure to this matter is the right course of action for Mylan and our stakeholders to allow us to move forward," Mylan CEO Heather Bresch commented. "Mylan has always been committed to providing patients in the U.S. and around the world with access to medicine, and we look forward to continuing to deliver on this mission."

"Mylan's agreement with CMS to correctly classify EpiPen is a huge win for Medicaid beneficiaries and American taxpayers," said CMS Administrator Seema Verma. "Medicaid will no longer be overcharged for EpiPen, protecting access for Medicaid beneficiaries who rely on this life-saving drug while saving hundreds of millions of dollars. This announcement puts drug manufacturers on notice that CMS remains vigilant in our duty to protect the integrity of the Medicaid program."

Twitter: @BethJSanborn