Drug company Mylan NV has agreed to pay $465 million to settle a whistleblower complaint alleging it overcharged the federal and state governments for its emergency allergy drug EpiPen. The settlement comes a year after French drug company Sanofi filed a whistleblower lawsuit under the False Claims Act in 2014, accusing Mylan of cheating federal and state Medicaid programs.
Sanofi, the parent company of the largest biotech employer in Massachusetts, Sanofi Genzyme, produces a competing epinephrine auto-injector drug called AUVI-Q.
According to the U.S. Attorney’s Office in Massachusetts, Mylan knowingly misclassified EpiPen, a branded drug, “as a generic drug to avoid paying rebates owed to Medicaid.”
The law requires pharmaceutical companies to pay Medicaid rebates of 13 percent for generic drugs and at least 23.1 percent for branded drugs, which cost substantially more than generics.
Taxpayers Out Hundreds of Millions of Dollars
Analysts estimate that Mylan’s scheme cost the Medicare program more than $700 million over much of the past decade. Accompanying the alleged rebate scam were several drastic price increases for the EpiPen, which cost less than $100 for a pair nine years ago but now cost more than $600.
Many critics on both sides of the aisle condemned the $465 million deal after it was first announced last October as a “sweetheart deal” that takes hundreds of millions of dollars from taxpayers’ pockets and puts it into Mylan’s bank account.
Mylan’s outrageous EpiPen price hikes allowed it to collect substantially more from both the Medicaid and Medicare programs. The amount Medicare and Medicaid spent on EpiPens rose to $486.8 million in 2015 from $86.5 million in 2011, a jump of 463 percent.
Sanofi itself will get $38.7 million of the total settlement as a whistleblower award, leaving the taxpayers’ recovery substantially less.
Punishment or Incentive?
The U.S. Attorney’s Office in Massachusetts touted the settlement as a victory, saying that it “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.”
None of the federal prosecutors mentioned why the hotly contested settlement was finalized. Critics of the deal say it incentivizes drugmakers to commit fraud because it means hefty profits can be made from fraud, even after fines and settlements are paid.
The U.S. Justice Department said Mylan entered into a corporate integrity agreement with the Department of Health and Human Services, requiring it to undergo an annual audit of its practices relating to the Medicaid rebate program.
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Are you aware of fraud being committed against the federal government, or a state government? If so, you may be protected and rewarded for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier.