Mylan pushes to seal $465M DOJ settlement as it posts a Q3 loss

epipen

Mylan execs are “working to finalize” a $465 million settlement with the federal government for Medicaid overcharges. But as Mylan’s catchphrase says, “Seeing is Believing,” and the deal has run into blowback from some critics who want the DOJ to ask for more.

As initially announced, the deal would see Mylan admit no responsibility but resolve allegations that the company misclassified its big-selling epinephrine injector as a generic.

Mylan approved the deal about a month ago, and since then, some public officials have lambasted it. Sen. Richard Blumenthal called it a “shadow of what it should be” and urged the Department of Justice to dig deeper, while West Virginia Attorney General Patrick Morrisey called it a “sweetheart” deal. 

Nevertheless, Mylan CFO Kenneth Scott Parks said on the company’s third-quarter conference call Wednesday that Mylan is working to finalize the settlement and put the allegations behind it.

The settlement set aside contributed to the company's $119.8 million net loss in the third quarter, compared to last year’s profit of $428.6 million on the period.

All told, the company came short of analyst expectations on revenue and EPS for the third quarter, but did grow sales 13% to $3.057 billion. Analysts had projected $3.121 billion for third-quarter sales. Mylan’s reported EPS of $1.38 missed consensus estimates of $1.45.

In the M&A arena, CEO Heather Bresch told analysts on Wednesday that the company is looking for bolt-on deals rather than a big acquisition.

But as the company looks to put its EpiPen problems in the rearview mirror, members of the Senate Judiciary Committee just this week called on the Federal Trade Commission to look into whether Mylan used anticompetitive practices to pad its EpiPen sales.

The senators’ request was just the latest negative headline for a company that’s encountered plenty of challenges since the first reports of significant EpiPen price hikes back in August. Before that, late last week, Bloomberg reported that the company was included as one of several in the generics industry to face a DOJ investigation for price fixing.

Mylan said it "is and has always been committed to cooperating with the Antitrust Division’s investigation. To date, we know of no evidence that Mylan participated in price fixing.”

In its defense of the original EpiPen price hikes, Mylan increased its patient assistance and said it would launch an authorized generic at half the price. Bresch told analysts on the third-quarter call that product would be launched in the first half of December.

Mylan has also placed some of the blame with a complex pharmaceutical pricing and distribution system in the U.S. that incentivizes higher costs for some players. Bresch said on Wednesday that the company understands that “the current system, which we didn't create but which we must compete in, was not built for consumerism."

"It cannot be fixed overnight, and it needs to be completely reinvented," she said.