Last Friday, the Department of Justice (“DOJ”) announced a $465 million settlement with Mylan, Inc. to resolve claims that it violated the False Claim Act. The suit was brought by a whistleblower under the False Claims Act qui tam provisions and involved the alleged improper misclassification of the EpiPen as a generic drug to avoid paying rebates owed mainly to Medicaid. The government chose to intervene. The case was primarily handled by the United States Attorney’s Office for the District of Massachusetts in conjunction with the Department of Health and Human Services Office of Inspector General (“HHS OIG”).
The case involved the Medicaid Drug Rebate program, which was enacted to make sure that state Medicaid programs were not susceptible to price gouging from manufactures that were the only source for a drug. The program required single-source or brand name drugs to pay a higher rebate to Medicaid that increased to the extent the price of the drug outpaces inflation. The whistleblower in this case was a competitor of Mylan, Sanofi-Aventis US LLC. According to the DOJ press release, Sanofi will receive a $38.7 million relator share as a result of this settlement.
As part of the settlement, Mylan also agreed to enter into a five-year corporate integrity agreement with the HHS OIG. The chief counsel to the HHS OIG said “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.” Acting Assistant Attorney General Chad A. Readler commented that “this settlement demonstrates the Department of Justice’s unwavering commitment to hold pharmaceutical companies accountable for schemes to overbill Medicaid.
This settlement represents one of the larger settlements against a pharmaceutical company. It is also notable because of the fact that a competitor was the whistleblower. It remains to be seen what effect this settlement will have on other competitors considering bringing forward information about potential misdeeds by other companies.
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