This week’s Department of Justice “Catch of the Week” goes to Mylan Inc. and Mylan Specialty L.P. Yesterday, the pharmaceutical companies agreed to pay $465 million to settle charges they violated the False Claims Act by purposely misclassifying EpiPen as a generic drug to avoid paying higher Medicaid rebates. In announcing the settlement, the government stressed its “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.” See DOJ Press Release
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. According to the government, Mylan circumvented this program and its purpose by erroneously reporting EpiPen as a generic drug to Medicaid. In doing so, and despite the absence of any therapeutically equivalent drugs, Mylan was able to demand massive price increases in the private market while avoiding its corresponding rebate obligations to Medicaid. Between 2010 and 2016, Mylan apparently increased the price of EpiPen by roughly 400 percent but paid only a fixed 13 percent rebate.
The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by competing pharmaceutical manufacturer Sanofi-Aventis US. Sanofi will receive a whistleblower award of roughly $38.7 million from the proceeds of the government’s recovery.
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