What if EpiPen price hikes were designed to crush rivals? Sanofi suit claims that, and much more

Sanofi launched Auvi-Q in 2013 and quickly gained market share, but Mylan struck back to protect its lock on the market, the French drugmaker claims in a lawsuit.

Mylan landed in hot water with its EpiPen pricing and marketing on Capitol Hill, at the U.S. Justice Department, with New York’s attorney general and in investor class-action lawsuits. It’s been targeted by the Federal Trade Commission, investigating whether it violated antitrust law by thwarting competition for its blockbuster product.

Now, Sanofi is joining in. The French drugmaker, which sold a rival anaphylaxis shot, Auvi-Q, sued Mylan Monday, claiming the EpiPen maker abused its monopoly position to “squelch” competition, hurting U.S. consumers in the process.

Threatened by Auvi-Q’s early share gains, Mylan fought back aggressively, aiming to protect its all-but-total lock on the rescue-shot market, the lawsuit claims. By leveraging its dominant market role, it eventually squeezed the Sanofi rival to the point where bringing it back to market after an October 2015 recall didn’t make financial sense.

The lawsuit serves as a rundown of Mylan’s public EpiPen woes and shenanigans, but it also includes some behind-the-scenes moves Sanofi says it faced when launching and marketing Auvi-Q. And it draws connections between Mylan’s public moves to allegations of a larger strategy designed to run off competition from rival products.

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There’s the initial price-hike outcry as parents, laying in their back-to-school EpiPen supplies last summer, suffered sticker shock at pharmacies. The Congressional hearings. The misclassification of EpiPen for Medicaid rebate purposes, which put Mylan on the hook for a $465 million (as yet unratified) settlement with government prosecutors. Its strings-attached discount deals with schools. Its citizen petition aimed at keeping Teva’s EpiPen generic from FDA approval. And so on.

All of that, however, followed a series of tactical maneuvers that Mylan used to combat Auvi-Q, Sanofi says, leveraging its dominant position in the market to quash competition. Among them: Mylan used “misleading advertising and other promotions” to “poison the well”  for Auvi-Q with doctors, opinion leaders and consumers, the lawsuit says.

Even Mylan’s price hikes were part of a monopolistic scheme, Sanofi claims. By jacking up retail prices—to $608 per two-pack from less than half that just a few years before—Mylan had room to offer steep rebates to payers that were “practically impossible” to refuse.

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Those deals also included stipulations that payers refuse coverage to any competing products. An investor class action, filed earlier this month in federal court, claims that Mylan's rebate offers were essentially kickbacks to pharmacy benefits managers (PBMs) in return for favorable EpiPen treatment. 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 were a marketing tactic that violated federal racketeering law law, the class action claims.

Sanofi's suit claims EpiPen's Medicaid misclassification helped, too. By pegging EpiPen as a generic drug, the company lowballed rebates it owed the government. It then used the excess revenue to offset bigger discounts to private payers, Sanofi said. According to government records, Auvi-Q was classified as a branded drug under Medicaid rules.

Mylan’s discounts-for-schools efforts, which the drugmaker touted as a public service, were also designed to keep competition at bay, the lawsuit said. Mylan allegedly required schools that took advantage of those discounts to swear off EpiPen rivals. New York AG Eric Schneiderman said last year his office was investigating whether Mylan’s school contracts included anticompetitive provisions; Mylan says they didn’t.

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Launched in the U.S. in January 2013, Auvi-Q had built up a 13% market share by late in the year, but Mylan’s battle strategy cut Auvi-Q back to 7% the next year, the lawsuit claims. By contrast, in Canada, where Sanofi faced Pfizer as an EpiPen marketer, Auvi-Q garnered 30% share by  2015.

Sanofi handed Auvi-Q marketing rights back to its partner, Kaléo, after potential dosing problems prompted that 2015 recall—and as its market share was shrinking. That company relaunched the device in February at a price even higher than EpiPen’s—$4,500—with copay discounts for patients.