Mylan’s long-running EpiPen scandal has cast a shadow over the company as regulators and politicians have piled on. In an effort to clear the air, Mylan will pay the Securities and Exchange Commission (SEC) $30 million to settle claims that it kept a financial loss from a previous settlement under wraps.
On Friday, the SEC said it would charge Mylan and immediately settle with the drugmaker claims that the company didn't notify investors of a potential loss on its books before a $465 million settlement with the Department of Justice (DOJ) in 2016.
“Investors were kept in the dark about Mylan's EpiPen misclassification and the potential loss Mylan faced as a result of the pending investigations into the misclassification," Antonia Chion, the SEC’s associate director in the division of enforcement, said in a release. "It is critical that public companies accurately disclose material business risks and timely disclose and account for loss contingencies that can materially affect their bottom line."
In its own statement, Mylan said the settlement did not admit or deny the SEC’s allegations and believed the deal was the “right course of action for the company.”
Mylan’s EpiPen probe began in 2014, when the Centers for Medicare & Medicaid Services alleged the company had misclassified the drug as a generic and defrauded Medicaid of millions. In October 2016, the company reached its $465 million settlement with the DOJ on those Medicaid fraud charges—a deal that freed Mylan from admitting guilt and drawing the ire of politicians and regulators.
But before that deal, according to the SEC, Mylan did not immediately disclose its $426 million liability, leaving investors in the dark on the state of the drugmaker’s finance post-agreement. The company went further, presenting misleading claims in its 2014 and 2015 risk factor disclosures, the SEC said.
With the SEC settlement Friday, Mylan has “fully resolved” all remaining probes as the company prepares for a megamerger with Pfizer’s Upjohn unit that will likely remake the generics landscape.
As part of the deal, reached in July, Mylan and Pfizer were in talks to move EpiPen’s production to the new merged generics company, which is expected to take flight in mid-2020. A spokeswoman for Pfizer, which manufactures the drug under its Meridian Medical Technologies unit, said talks are ongoing and terms have yet to be finalized.
EpiPen has faced major production shortages since late 2017, when the FDA found serious issues at the Pfizer plant where the auto-injectors are made. At the time, Pfizer said Meridian was suffering "manufacturing constraints," but it was working with Mylan to improve "consistent availability."