Despite the criticism and calls for the government to get a better deal out of Mylan, the drugmaker announced on Thursday that it finalized a settlement with the Department of Justice for $465 million relating to EpiPen’s misclassification on Medicaid. Interestingly, the whole episode started with a tip from Sanofi, which previously marketed a competing product.
Mylan finished the deal 10 months after first announcing the proposed settlement, additionally agreeing to enter a Corporate Integrity Agreement (CIA) that “does not contain an admission or finding of wrongdoing,” according to a release.
But the DOJ said the five-year CIA does require an independent review organization to annually review different aspects of Mylan’s practices relating to the Medicaid drug rebate program. In a statement, Mylan CEO Heather Bresch reiterated that “bringing closure to this matter is the right course of action for Mylan and our stakeholders to allow us to move forward.”
Competing pharma company Sanofi, which previously sold another injector, brought up the issue with authorities, according to the DOJ. Sanofi stands to get $38.7 million from the settlement.
The settlement stems from the revelation last August that big-selling EpiPen had been misclassified on Medicaid as a “noninnovator” drug since before Mylan acquired the injector back in 2007. The drugmaker struck that deal much faster than the DOJ normally takes to reach a settlement, agreeing to terms within a matter of weeks of close scrutiny. The company's stock jumped on the announcement as industry watchers felt the liability could be higher.
More recently, a government report found that the misclassification cost taxpayers $1.27 billion. Before and after that finding, public officials blasted the proposed deal, calling on the government to dig deeper and demand more.
Sen. Richard Blumenthal, D-Conn., for one, called the settlement proposal “unacceptable” and “a shadow of what it should be.” Sen. Chuck Grassley, R-Iowa, said the Obama Administration "failed to use all available tools to hold Mylan accountable.”
The settlement was separate from the pricing scrutiny Mylan suffered for its key product that kicked off about a year ago. Over several years, the drugmaker hiked its EpiPen price by several hundred percent, with those increases making their way into countless media reports last year. In response to public outrage, the drugmaker introduced an authorized generic and expanded its patient access program.
Putting the government settlement in its rearview mirror is likely a relief for Mylan as it navigates a tough generic pricing environment and deals with FDA delays on key copycats of Teva’s Copaxone and GlaxoSmithKline’s Advair.
Another ongoing topic for the drugmaker and its investors is executive pay. After Mylan announced Chairman Robert Coury’s pay package for 2016—a whopping $98 million—investors revolted at the company’s annual meeting. Eighty-three percent voted against Mylan’s executive pay packages, although it wasn’t a binding vote.
After the meeting, New York City Comptroller Scott Stringer led a group calling for Coury and compensation chair Wendy Cameron to step down. Mylan responded that it would “engage in an extensive program of shareholder outreach over the coming months in order to elicit and understand” their perspectives.
Sanofi has sold Auvi-Q, an EpiPen competitor now marketed by Richmond, Virginia’s Kaleo Pharma. After previous manufacturing problems forced Sanofi to call it quits on the product, Kaleo reintroduced the injector earlier this year at a price several times that of EpiPen. Payers weren’t fond of the strategy, and many blocked coverage.