Mylan, DOJ agree to $465M settlement over EpiPen misclassification

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Mylan has agreed to pay $465 million in a settlement with the Justice Department over EpiPen's classification as a non-innovator drug under the Medicaid Drug Rebate Program.

The settlement resolves any possible rebate liability claims by federal and state governments related to whether the auto-injector should have been subject to higher rebates under Medicaid, according to a company statement. Under the settlement, Mylan will enter a corporate integrity agreement with the Department of Health and Human Services’ Office of Inspector General.

The company said the injector pens had been classified by the Centers for Medicaid & Medicare Services as a non-innovator drug since before Mylan acquired the product in 2007.

Mylan will include the loss on its Q3 income statement, adding that it has adjusted its 2016 earnings per share estimate from approximately $5 to approximately $4.80.

The announcement came just days after Sens. Richard Blumenthal (D-Conn.), Chuck Grassley (R-Iowa) and Amy Klobuchar (D-Minn.) called for a federal investigation into the EpiPen drug misclassification, alleging Mylan may have violated the False Claims Act.

CMS Acting Administrator Andy Slavitt wrote that due to EpiPen's incorrect classification, Mylan was paying rebates worth 13 percent of the average manufacturer price (AMP), compared with the 23.1 percent of AMP due for brand-name drugs, according to a letter addressed to Sen. Ron Wyden (D-Ore.) The drug was misclassified since Q4 1997, according to CMS’ records. 

Medicaid and Medicare Part D spent more than $1.2 billion on EpiPens between 2011 and 2015, a 463 increase, according to the letter. And over a span of seven years, Medicare Part D spending on EpiPens grew 1,151 percent while the number of beneficiaries using the treatment increased just 164 percent, the Kaiser Family Foundation found.