Mylan Finalizes $465M Settlement for Misclassifying EpiPen to Avoid Medicaid Payments

Mylan CEO Heather Bresch / Getty
August 17, 2017

Embattled pharmaceutical company Mylan on Thursday finalized a $465 million settlement with the Department of Justice for misclassifying the life-saving allergy treatment EpiPen to avoid paying Medicaid costs.

"This settlement demonstrates the Department of Justice's unwavering commitment to hold pharmaceutical companies accountable for schemes to overbill Medicaid, a taxpayer-funded program whose purpose is to help the poor and disabled," said Chad Readler, acting assistant attorney general of the department's civil division.

"Drug manufacturers must abide by their legal obligations to pay appropriate rebates to state Medicaid programs," Readler added, referring to Mylan.

The Centers for Medicare and Medicaid Services confirmed in October 2016 that Mylan misclassified the EpiPen as a generic brand to avoid paying Medicaid rebates.

Between 2010 and 2016, Mylan hiked the price of EpiPen by approximately 400 percent while only paying a fixed 13 percent rebate to Medicaid in the same period. The Department of Health and Human Services revealed the EpiPen may have overcharged taxpayers by $1.27 billion over 10 years.

Members of Congress have criticized the settlement for being significantly less than the amount Mylan overcharged taxpayers.

"Bringing closure to this matter is the right course of action for Mylan and our stakeholders to allow us to move forward," Mylan Chief Executive Heather Bresch said in a statement.

Bresch, who is Democratic Sen. Joe Manchin's (W.Va.) daughter, came under scrutiny after defending her $19 million dollar salary on television while the pharmaceutical company was being criticized for hiking the price of EpiPen by over 500 percent. Her salary rose from $2.4 million in 2007 to nearly $19 million in 2015.

When Mylan acquired EpiPen in 2007, the price of the life-saving treatment was only $100. The price of a two-pack of EpiPen rose to more than $600 by 2016.

As part of the settlement, Mylan entered into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General. The agreement requires "an independent review organization to annually review multiple aspects of Mylan's practices relating to the Medicaid drug rebate program," according to the Department of Justice.

"Our five-year corporate integrity agreement requires intensive outside scrutiny to assess whether Mylan is complying with the rules of the Medicaid drug rebate program," said Gregory E. Demske, chief counsel to the inspector general for the Department of Health and Human Services.

"In addition, the CIA requires individual accountability by Mylan board members and executives," Demske added.

Mylan has since offered a generic version of the EpiPen for $300.