EpiPen manufacturer Mylan agrees to $465M settlement with U.S.

Mylan, the maker of life-saving EpiPens for allergy sufferers, has agreed to pay $465 million to settle claims it shortchanged taxpayers by misclassifying its popular device as a generic instead of a brand-name product, a U.S. attorney for Massachusetts said Thursday.

The Justice Department said Mylan’s move allowed it to pay smaller rebates to states under Medicaid, the government insurance program for the poor.

“Mylan misclassified its brand-name drug, EpiPen, to profit at the expense of the Medicaid program,” Acting U.S. Attorney William D. Weinreb said. “Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules.

Manufacturers pay states a 23.1 percent rebate on brand-name drugs compared to 13 percent for generics, so state Medicaid programs are less susceptible to price gouging among makers of drugs from a single source, the federal prosecutor noted.

The settlement comes several months after Congress lit into Mylan for raising the price of its EpiPen packs from $100 in 2009 to more than $600 last year.

Many parents and schools buy up the epinephrine injectors each fall to make sure children can stave off anaphylactic shock, so lawmakers took notice last fall.

The wave of scrutiny, including a Senate probe and House hearings, paved the way last year for a half-price generic version of the pens and the settlement, which was touted last year but not confirmed until Mr. Weinreb’s announcement.

In a statement Mylan said the settlement does not include an admission of wrongdoing.

“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,” CEO Heather Bresch said.

The Centers for Medicare and Medicaid Services praised the announcement, noting Mylan has agreed to use the correct reference price for the rebate program, retroactive to April 1 of this year.

“Mylan’s agreement with CMS to correctly classify EpiPen is a huge win for Medicaid beneficiaries and American taxpayers,” CMS Administrator Seema Verma said. “Medicaid will no longer be overcharged for EpiPen, protecting access for Medicaid beneficiaries who rely on this lifesaving drug while saving hundreds of millions of dollars.”

Yet some senators said Mylan got off easy.

Senate Judiciary Committee Chairman Chuck Grassley, Iowa Republican, said the amount is roughly a third of what Mylan should have paid.

“There are serious problems here. It looks like the settlement amount shortchanges the taxpayers. The government’s own watchdog said the taxpayers may have overpaid for EpiPen by as much as $1.27 billion over 10 years,” Mr. Grassley said, citing figures from the Department of Health and Human Services’ inspector general.

Sen. Richard Blumenthal, Connecticut Democrat, called the amount “completely insufficient.”

“Quite simply,” he said, “the Department of Justice is letting this deceptive pharmaceutical behemoth off the hook.”