Mylan jacked up EpiPen prices in PBM kickbacks scheme, class action suit claims

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Mylan is facing a new class action suit over its pricing of EpiPen.

As if it wasn’t bad enough that Mylan's EpiPen faces declining sales and a global recall, the company now must contend with a class action lawsuit over its pricing. Filed Monday in federal court, the suit is the first to bring claims against Mylan under the federal Racketeer Influenced and Corrupt Organizations Act (RICO).

What make this a RICO suit are allegations that Mylan paid hefty rebates to pharmacy benefits managers (PBMs) in return for favorable EpiPen treatment. Those PBMs included CVS Caremark, Express Scripts and UnitedHealth Group’s OptumRX, according to the suit, though none of them is named as a defendant.

Rather than a source of blame for high prices, as Mylan CEO Heather Bresch contended in last year's EpiPen pricing hearings on Capitol Hill, the PBM rebates essentially served as kickbacks, the lawsuit states.

A spokeswoman for Mylan declined to comment in response to an e-mailed query from FiercePharma.

The suit alleges that Mylan undertook “a scheme and enterprise whose purpose was unlawfully inflating the list price for EpiPen then marketing the spread to PBMs. This scheme directly and foreseeably causes consumers to overpay for this life-saving medication.”

The suit names three plaintiffs and outlines the rising prices they paid for EpiPen over time. Christina Kollmeyer, for example, has a high-deductible plan from Cigna and requires EpiPen for her son. In 2016, a two-pack cost her $313.38, according to the suit. In January 2017, her out-of-pocket cost more than doubled to $735.09.

The claim goes on to state that patients in high-deductible plans have been hit especially hard by Mylan’s price increases—a problem compounded by a broader shift towards those plans. The complaint quotes Kaiser Family Foundation statistics showing that 29% of all patients covered by employer-based plans as of 2016 have high-deductible policies, up from 17% in 2011. Those patients are forced to pay full list price for EpiPen until they hit their deductibles, the suit notes.

Drug copays are also on the rise across the board, the suit contends. A study in the Journal of the American Medical Association found that annual out-of-pocket spending on EpiPen by insured patients more than doubled in the 7 years ending in 2014.

The class action is just another thorn in the side of Mylan, which has faced mounting troubles ever since a public outcry erupted over EpiPen pricing last year. The product is losing ground to competitors such as Kaléo’s Auvi-Q, and CVS has teamed up to sell its own generic version of the allergy injection. In March, research from athenaHealth revealed that prescriptions for EpiPen alternatives have quadrupled since the start of this year—despite Mylan’s efforts to hold onto customers by introducing its own authorized generic.

Then Mylan was forced to recall several lots of EpiPen after some patients reported the injectors failed to activate. The initial recalls were in Europe and Asia, but late Friday, Mylan announced some lots in the U.S. also had to be pulled. And in January, the company faced questions from the Federal Trade Commission about whether it improperly acted to delay generic competition for EpiPen. This after reaching a tentative settlement with the Justice Department over allegations it overcharged Medicaid for the allergy treatment.

The plaintiffs in the newly filed Mylan class-action are represented by Hagens Berman—the same firm that filed a class action suit against Sanofi, Novo Nordisk and Eli Lilly in January over insulin pricing. That suit also alleges that the companies sought to profit off the growing spread between list prices of insulin and the prices charged to pharmacy benefits managers.

Hagens Berman is actively seeking EpiPen customers to join the class action suit via a website it set up for anyone who has used the product in the past or even considered buying it but didn't because of its high price.

“Mylan has tried to pass the buck and excuse itself from any responsibility, attempting to wash its hands of the dubious scheme that has plagued allergy sufferers with unbearably high prices,” said Steve Berman, managing partner, in a press release. “This suit sets the record straight and gives the full picture, revealing Mylan as the ringleader in this tightly organized enterprise to spike EpiPen prices.”