Mylan Agrees to $465 Million Settlement Over Medicaid Classification of EpiPen

Mylan has agreed to a $465 million settlement with the U.S. Department of Justice to resolve questions about the classification of EpiPen products for purposes of the Medicaid Drug Rebate Program, the company said in a statement Friday.

At issue was whether Mylan incorrectly classified the EpiPen as a generic drug under the program. In a letter released by Democratic lawmakers on Oct. 5, Andrew M. Slavitt, head of the Centers for Medicare and Medicaid Services, said the EpiPen had been misclassified as a generic drug since 1997, meaning that the rebate for the product is 13 percent of average manufacturer price as compared to a 23.1 percent rebate that is given for brand drugs. Slavitt said Mylan was expressly told that the product was incorrectly classified.

The terms of the settlement do not provide for any finding of wrongdoing on the part of Mylan. The company said the EpiPen had been classified as a non-innovator or generic drug under CMS since before Mylan acquired the product in 2007.

SEE ALSO:

• Mylan Will Launch Generic Version of EpiPen at Half the Price
• Questions Arise Over EpiPen Profit Figure Given to Congress by Mylan
• New York A.G. Launches Antitrust Investigation Into Mylan, Maker of the EpiPen
• EpiPen Misclassified as Generic Drug, Federal Officials Claim
• Questions Arise Over EpiPen Profit Figure Given to Congress by Mylan

"This agreement is another important step in Mylan's efforts to move forward and bring resolution to all EpiPen Auto-Injector related matters," CEO Heather Bresch said in the statement. "The agreement is in addition to the significant steps Mylan has taken in relation to EpiPen Auto-Injector over the past several weeks, including the unprecedented, pending launch of a generic version of EpiPen Auto-Injector and expansion of our patient access programs for this product. Entering into this settlement is the right course of action at this time for the Company, its stakeholders and the Medicaid program."

The settlement terms provide for resolution of all potential rebate liability claims by federal and state governments about whether the product should have been classified as a brand drug and subject to a higher rebate formula.

"In connection with the settlement, Mylan expects to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services," Mylan said. "Mylan will continue to work with the government to finalize the settlement."

Shares of Mylan rose in wake of the settlement.

The company has come under fire for the nearly 550 percent increase in the price of the lifesaving product over eight years. Amid criticism from lawmakers and consumers of the whopping price of the EpiPen, Mylan announced that it would would launch a generic alternative at a 50 percent discount of the list price. The generic EpiPen will cost $300 per two-pack carton and will be identical to the branded medicine. In addition, Mylan has said it will offer financial help to customers and will expand the number of low-income patients eligible to receive company subsidies.

This report will be updated.

Image Credit: Greg Friese via Flickr Creative Commons