Mylan will pay $465 million to settle claims that it overcharged states for its signature EpiPen, according to a Thursday Department of Justice press release. The company also signed an agreement with the federal government to enter into a review of its Medicaid pricing practices.
For years, Mylan classified EpiPen in a way that forced Medicaid to overpay for the product, according to the Centers for Medicare and Medicaid Services. The company may have overcharged taxpayers as much as $1.27 billion over 10 years, the Department of Health and Human Services’s watchdog organization said in May.
Lawmakers slammed the federal agencies on Thursday for letting Mylan get off the hook too easily with the settlement. Sen. Richard Blumenthal (D-Conn.) called it “completely insufficient,” and Sen. Chuck Grassley (R-Iowa) cast is as “disappointing” in statements. Mylan, meanwhile, called the settlement, “the right course of action,” and said that the product has been reclassified under Medicaid as of April 1.
A Department of Justice spokesperson said that $231.8 million will go back to the federal government, and $214 million will be split between all 50 states.
But not all of the settlement will go to taxpayers — at least $38.7 million of the federal allocation, and some of the states’ allocations, will go to the drug company Sanofi (SNY), which used to sell the Auvi-Q, a competing product, and who brought this issue to the government’s attention. Sanofi will split part of the funds with Ven-A-Care of the Florida Keys, Inc., a secretive company that has made a name for itself helping the Department of Justice squeeze hundreds of millions of dollars out of pharmaceutical companies.
As part of the settlement, Mylan will also enter into a “corporate integrity agreement” with the Office of the Inspector General of the Department of Health and Human Services, which mandates that Mylan regularly report about how it is staying in compliance with the law.
Mylan must also hire an independent company to conduct a review of some of its pricing practices — and might be required to return more money to the government if the review finds evidence of wrongdoing.
An Office of the Inspector General spokesperson said that Mylan was not accused of incorrectly pricing EpiPen, merely classifying it incorrectly, and that the corporate integrity agreement is broader than the particular conduct that motivated it.
The independent organization will also review all of Mylan’s products that are currently eligible for Medicaid rebates and make sure that they are classified correctly, which might catch something like a misclassified EpiPen in the future.
“If the [organization] found a product that was incorrectly classified, then Mylan would either change the classification or explain from its perspective why the classification was correct,” the spokesperson said.
The DOJ announcement comes 10 months after Mylan announced the settlement. The agency declined to comment what transpired during that time.