On Thursday, August 17, 2017, Mylan and Mylan Specialty agreed to the pay $465 million to resolve accusations that they violated the False Claims Act by misclassifying the EpiPen as a generic drug, so they could avoid paying rebates to Medicaid. The announcement was made by the U.S. Attorney’s Office. Both companies are wholly owned by Mylan N.V., which is a Dutch-registered entity. However, the company is headquartered in Canonsburg, Pennsylvania.

The Medicaid Drug Rebate Program was designed by Congress to shield Medicaid programs from price gouging drugs that were only available from a single source. In such cases, the single source would be subjected to high rebates depending on the difference between the drug’s present price and the price increase taking only the general rate of inflation into account. Generic drugs, which are available from several sources, were subject to lower rates and until recently were not subjected to the inflationary component.

The government alleges that Mylan avoided paying state Medicaid programs higher rebates by intentionally misclassifying the EpiPen as a generic drug. However, EpiPen had no FDA-approved alternative and Mylan marketed and priced the medication as a brand name drug. Between 2010 to 2016, the price of the EpiPen was increased by roughly 400%.

As a part of the settlement, Mylan has agreed to cooperate with the Department of Health and Human Services Office of Inspector General. The company had consented to an independent annual review of Mylan’s practices related to the Medicaid rebate program.

The matter was brought to the attention of the United States government when Sanofi made a complaint with the U.S. Attorney’s Office in 2014. At the time, Sanofi was selling an epinephrine auto-injector drug, AUVI-Q, and was classifying it as a brand name drug. In 2016, the company filed a complaint against Mylan using the qui tam provisions of the False Claims Act. Therefore, Sanofi has a right to receive a portion of the recovery.

As a part of the settlement, Sanofi will receive $38.7 million plus a share of the states’ recovery.

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