Facing fire from all angles over EpiPen pricing, Mylan ($MYL) worked quickly earlier this month to settle federal allegations that it overcharged Medicaid for its big-selling epinephrine injector. Now, one senator says that $465 million deal wasn’t enough.
In an Oct. 14 letter, Sen. Richard Blumenthal urged U.S. Attorney General to reject the settlement, calling the agreement “a shadow of what it should be." Investors seemed to agree with Blumenthal’s sentiment at the time of the announcement, sending Mylan’s stock upward 10% in relief that the deal hadn't cost more.
Blumenthal's letter came one week after Mylan announced the DOJ deal, which followed two weeks of scrutiny on Mylan’s rebates to Medicaid. The Center for Medicare and Medicaid Services said the company had misclassified its blockbuster EpiPen as a generic, costing Medicaid hundreds of millions in rebates. Mylan admitted no wrongdoing in the settlement.
Blumenthal isn’t content with that arrangement. He said the deal lacks “real accountability for Mylan’s apparent lawbreaking.”
“A settlement that lacks any acknowledgment of responsibility and requires payment smaller than profits made illegally at taxpayer expense is simply unacceptable,” Blumenthal wrote in the letter. “ … DOJ must fulfill its responsibility to fully and fairly investigate the facts, establish intent, and punish wrongdoing to deter present and future bad actors.”
The misclassification lasted nearly a decade cost taxpayers more than $700 million, according to an estimate Blumenthal cited.
Even if Lynch's agency approves the deal, Mylan is far from out of the woods with its EpiPen headache. Following the settlement, Wells Fargo analyst David Maris said the deal “only addresses the CMS portion of this; it does nothing to answer the original issue--EpiPen pricing and consumers."
Following years of repeated price hikes and a furious public upswell of indignation, 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 its own investigation into the Medicaid rebates.
Meanwhile, investors aren't happy either, given the suffering all this bad news has dealt to Mylan's shares. Just last week, Bernstein Liebhard announced a shareholder suit demanding damages.
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