This “Whistleblower Spotlight” features Sanofi Aventis US, one of our candidates for 2017 Whistleblower of the Year. The US subsidiary of the French pharmaceutical giant is our only “corporate” candidate for this accolade but represents a growing trend in the whistleblower world of companies saying something when they see something they believe falls outside the realm of business fair play. In this case, it was calling out Mylan Inc. and Mylan Specialty L.P. for misclassifying Mylan’s EpiPen as a generic drug to avoid paying higher Medicaid rebates.
Under the Medicaid Drug Rebate Program, state Medicaid programs are entitled to larger rebates for brand-name drugs compared to generics. This is to ensure Medicaid programs are not subject to price gouging by manufacturers of drugs available from only a single source. Sanofi exposed Mylan’s alleged efforts to circumvent this program by reporting EpiPen as a generic drug despite the absence of any therapeutic equivalents. In doing so, Mylan apparently was able to demand massive price increases in the private market while avoiding its corresponding rebate obligations to Medicaid. According to the government, between 2010 and 2016, Mylan increased the price of EpiPen by roughly 400 percent but paid only a fixed 13 percent rebate.
Sanofi exposed Mylan’s transgressions in a whistleblower lawsuit Sanofi filed under the qui tam provisions of the False Claims Act. The statute allows a private party to step into the shoes of the government and bring suit on the government’s behalf against those who defraud the government. In return for this noble quest, whistleblowers are entitled to a share of any government recovery flowing from the action. Sanofi’s whistleblower suit resulted in a payout by Mylan of $465 million of which Sanofi received an award of roughly $39 million. It was one of the largest whistleblower awards this year.
Sanofi is not the first corporate whistleblower to go after a competitor under the False Claims Act. It is becoming a more common option these days as an alternative to pursuing a challenge under the antitrust laws, which often can be a significantly more time-consuming and expensive legal route, and without the benefit of government support. Sanofi actually doubled down with its whistleblower strategy by coupling it with a private antirust action. In a Sherman Act case it filed earlier this year, Sanofi charged Mylan with engaging in various tactics to squelch Sanofi’s Auvi-Q allergy treatment, an emerging competitive threat to Mylan’s blockbuster EpiPen.
Sanofi may not fit the mold of the traditional whistleblower seeking truth and justice and safeguarding the public wellbeing. The company’s whistleblower pursuit likely was more about protecting the company against an entrenched competitor with monopoly power.
Moreover, Sanofi itself has had its own run-ins with the government and whistleblowers accusing the company of fraud and consumer harm. Earlier this year the company paid roughly $20 million to settle claims of overcharging the VA, and a few years before that it paid more than $100 million to settle claims of giving illegal kickbacks to physicians.
Nevertheless, we believe Sanofi’s successful whistleblower challenge against Mylan this year deserves special recognition. If more companies join in the effort of policing their own industries, particularly in the healthcare sector still rampant with fraud, we will all be the better for it. That is why we think Sanofi deserves your consideration for this year’s Whistleblower of the Year.
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