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Mylan, Justice Department sign agreement on EpiPen overcharges


The State Journal

CHARLESTON, W.Va. — Mylan NV has agreed to pay the federal government $465 million to resolve allegations it overbilled Medicaid for its EpiPen device.

The Justice Department hailed the agreement, while Mylan said it was old news in that it was formally agreeing to a settlement it reached late last year.

Mylan CEO Heather Bresch

“This settlement demonstrates the Department of Justice’s unwavering commitment to hold pharmaceutical companies accountable for schemes to overbill Medicaid, a taxpayer-funded program whose purpose is to help the poor and disabled,” Acting Assistant Attorney General Chad A. Readler of the Department of Justice’s Civil Division said in a prepared statement. “Drug manufacturers must abide by their legal obligations to pay appropriate rebates to state Medicaid programs.”

In her statement, Mylan CEO Heather Bresch said, “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.”

Congress enacted the Medicaid Drug Rebate Program to ensure that state Medicaid programs were not susceptible to price gouging by manufacturers of drugs that were available from only a single source, according to the Justice Department. Single-source, or brand-name, drugs are subject to a higher rebate that is payable to Medicaid and that increases if the price of the drug outpaces the rate of inflation. Generic drugs originating from multiple manufacturers are subject to lower rebates that until recently were not subject to inflationary adjustments.

The settlement resolves the government’s allegations that Mylan, by erroneously reporting EpiPen as a generic drug to Medicaid despite the absence of any therapeutically equivalent drugs, was able to demand massive price increases in the private market while avoiding its corresponding rebate obligations to Medicaid, according to the Justice Department. Between 2010 and 2016, Mylan increased the price of EpiPen by approximately 400 percent yet paid only a fixed 13 percent rebate to Medicaid during the same period. The government also alleged that although Mylan was aware that its drug was not a generic, it nevertheless claimed generic status for EpiPen in the Medicaid program to avoid paying a higher rebate.

The settlement resolves allegations brought in a lawsuit filed under the whistleblower provisions of the False Claims Act, which permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery, the Justice Department said. The whistleblower in this case was the pharmaceutical manufacturer Sanofi-Aventis US. It will receive about $38.7 million as its share of the federal recovery.

Mylan has also entered into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General that requires an independent review organization to annually review multiple aspects of Mylan’s practices relating to the Medicaid drug rebate program.

“Our five-year corporate integrity agreement requires intensive outside scrutiny to assess whether Mylan is complying with the rules of the Medicaid drug rebate program,” said Gregory E. Demske, chief counsel to the inspector general for the U.S. Department of Health and Human Services. “In addition, the (corporate integrity agreement) requires individual accountability by Mylan board members and executives.”

According to Mylan, the settlement provides for resolution of all potential Medicaid rebate liability claims by the federal government, as well as potential claims by certain hospitals and other covered entities that participate in the 340B Drug Pricing Program. The settlement allocates money to the Medicaid programs of all 50 states and establishes a framework for resolving all potential state Medicaid rebate liability claims within 60 days. The settlement does not contain an admission or finding of wrongdoing.

Mylan will reclassify EpiPen Auto-Injector for purposes of the Medicaid Drug Rebate Program and pay the rebate applicable to innovator products effective as of April 1, 2017, the company’s statement said.

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