When Mylan ($MYL) quickly settled its Medicaid allegations a week ago with a $465 million payment, analysts and politicians predicted the company’s EpiPen trouble would be far from over. Now, that’s ringing true as the pharma faces a shareholder lawsuit pressing for damages from related share price drops.
Bernstein Liebhard announced a class action suit claiming securities violations at Mylan caused investors to suffer when they came to light, pointing to several drops in share prices following reports that the company overcharged Medicaid for its epinephrine injector. All the while, the company made “materially false and misleading” statements about EpiPen’s Medicaid classification, the suit says.
According to numerous reports in recent weeks, Mylan provided lower rebates to the federal program due to the injector's misclassification as a generic.
Bernstein Liebhard's lawsuit comes just as Mylan wrapped up older issues at the Justice Department. Late last Friday, the company forked over $465 million to resolve federal allegations about the Medicaid rebates. That in itself was a feat, as reports of those rebates had only been circling for two weeks. The feds said the company overcharged Medicaid by hundreds of millions of dollars through the misclassification. Mylan admitted no wrongdoing in the deal.
Following the settlement a week ago, shares shot up about 10% as investors were relieved the company rid itself of a liability predicted to be far in excess of the payment.
But that remains far from the only challenge facing the company. It’s weathered a months-long firestorm over EpiPen price hikes totaling more than 400% in the span of several years. Members of Congress have kicked off investigations and publicly blasted the company, while the New York attorney general launched his own probe. Now the SEC says it’s getting involved, announcing last week it’ll look into the company’s Medicaid rebates.
"With investigations now being initiated by Congress and others, this may be the beginning of Mylan's problems--not the end,” Rep. Elijah Cummings, ranking member of the House Committee on Oversight and Government Reform, said recently.
Mylan strikes $465M EpiPen deal with DOJ, but other threats remain
U.S. shelled out $1.3B on EpiPen, and Mylan could face $400M-plus in back rebates
About that half-priced EpiPen Mylan promised? It could be awhile
Mylan could face big Medicaid bill after underpaying EpiPen rebates, CMS says
Mylan CEO Bresch used a sky-high tax rate to lowball EpiPen profits by 66%
Lawmakers smack Mylan CEO Bresch for pay, plane and pricing at EpiPen hearing
Challengers eye a piece of EpiPen market as pricing scandal engulfs Mylan