Rutledge Reaches Settlement with EpiPen Manufacturer
August 30, 2017
Arkansas will receive over $1.3 million
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge, along with the United States and other states, has agreed to settle allegations against Mylan Inc. and its wholly-owned subsidiary, Mylan Specialty L.P. Mylan allegedly and knowingly underpaid rebates owed to the Medicaid program for “EpiPen” drugs.
Under the settlement terms, Mylan will pay $465 million to the U.S. government and the individual states effected. The states will share $213 million of the settlement. Mylan has agreed to reimburse the Medicaid program $4.5 million in restitution and other recovery with 1.3 million being deposited in the Arkansas Medicaid Trust Fund.
“Attempts by pharmaceutical companies to break the law and steal money from state Medicaid programs cannot and will not be tolerated,” said Attorney General Rutledge. “EpiPen is a lifesaving drug that many depend on, but Mylan ignored its obligations under both state and federal law. Because of this settlement, Mylan is being held accountable for its costly and harmful actions.”
Mylan, a Pennsylvania based company, misclassified EpiPen as a generic drug, despite that it had no FDA-approved equivalents and was being marketed and priced by Mylan as a brand name drug. The federal and state governments contend that between 2010 and 2016, Mylan raised the price of EpiPen by approximately 400 percent and used its misclassification of the drug to avoid paying state Medicaid program rebates.
The Medicaid Drug Rebate Statute, enacted by Congress in 1990, requires participating pharmaceutical manufacturers, such as Mylan, to sign a Rebate Agreement with the Secretary of the U.S. Department of Health and Human Services as a precondition for obtaining Medicaid coverage for their drugs and to pay quarterly rebates to Medicaid programs for drugs dispensed to Medicaid beneficiaries. This cost containment measure ensures that the payment for outpatient drugs to state Medicaid programs are not susceptible to price gouging of drugs that are only available from a single source. Participants are required to provide information to CMS concerning their covered drugs. Brand name drugs are subjected to a higher rebate that includes any difference between the drug’s current price and the price the drug would have had if its price had increased only at the general rate of inflation. On the other hand, generic drugs originating from multiple manufacturers are subject to lower rebates that did not include an inflationary component. The responsibility is with the manufacturer to properly classify the drug so that the proper rebate can be calculated.
Specifically, this settlement resolves allegations that from July 29, 2010 to March 31, 2017, Mylan submitted false statements to the Centers for Medicare and Medicaid Services (CMS) that incorrectly classified EpiPen. Mylan also did not report a Best Price to CMS for EpiPen. As a result, Mylan submitted or caused to be submitted, false statements to CMS and/or the states relating to EpiPen for Medicaid rebate purposes, and underpaid its EpiPen rebates to the State Medicaid Programs.
A National Association of Medicaid Fraud Control Units Team participated in the settlement negotiations with Mylan on behalf of the states and included representatives from Attorneys General offices in California, New York, North Carolina, South Carolina, Washington and the Commonwealths of Massachusetts and Virginia.