Mylan has agreed to pay the federal government $465 million to settle claims it skirted paying a higher Medicaid rebate for the allergy drug EpiPen.
The settlement Friday comes as lawmakers are pushing the Department of Justice to investigate whether Mylan violated the False Claims Act by intentionally misclassifying the EpiPen with Medicaid to avoid paying the government a higher rebate. The settlement also comes after lawmakers raised questions about the misclassification in response to public anger over EpiPen’s $600 price tag.
“This agreement is another important step in Mylan’s efforts to move forward and bring resolution to all EpiPen Auto-Injector related matters,” said Mylan CEO Heather Bresch. The company did not admit wrongdoing in the settlement.
At issue is how Mylan classified the EpiPen with the Medicaid Drug Rebate Program, which requires drug makers to offer rebates for products reimbursed by Medicaid.
A generic drug pays a cheaper rebate, 13 percent of the drug’s average sales price, than a brand name drug at 23 percent.
Mylan has classified EpiPen as a generic, but the Obama administration said it meets the definition of a brand name drug because it has patent protection and no real competition.
The Centers for Medicare and Medicaid Services told lawmakers this week that it appears the EpiPen has been misclassified since 1997, which is 10 years before Mylan acquired the drug in 2007. The company has raised the price by 400 percent since buying it in 2007.
An analysis from Republican Iowa Sen. Chuck Grassley’s office found that a majority of Mylan’s revenue was from government programs such as Medicaid and Medicare.
CMS told lawmakers that it warned Mylan several times about the misclassification and that it could result in legal action under the False Claims Act.
Mylan has had to settle such allegations before. In 2009, Mylan and the drug maker UDL paid the federal government $118 million over claims that it underpaid rebates for a slew of products.
