Amid EpiPen shortage, Mylan settles with SEC.
Mylan NV, headquartered in the Netherlands with U.S. operations based in Canonsburg, Pennsylvania, is the manufacturer of EpiPen. The company recently agreed to pay $30 million in fines to settle charges by the U.S. Securities and Exchange Commission (SEC) that the it “misled investors by making false accounting statements and disclosures: about a Justice Department probe into whether the company had overcharged Medicaid by hundreds of millions of dollars,” according to the agency.
“Mylan believes at this time, taking all other matters into consideration, that this settlement is the right course of action for the Company. The Company continues to be committed to the highest levels of integrity with respect to all aspects of its business operations, including its public filing disclosures and communications with investors,” it said.
In its complaint filed in federal district court in Washington, D.C., the SEC alleged that Mylan had misclassified its ‘bread and butter’ product, EpiPen, as a generic drug instead of a brand-named option. Epipen is commonly carried by individuals who suffer from severe, life-threatening allergies and is used to treat anaphylactic shock should the carrier inadvertently come into contact with an allergen.
According to the complaint, “the company had raised the price of the drug more than 500% during the period during which the company was misclassifying it as generic but failed to pay the additional rebates to the federal government.”
In October 2014 the Centers for Medicare and Medicaid Services reached out to Mylan, telling the company EpiPen was misclassified. After that, for two years, the Justice Department conducted a civil probe into the matter and ultimately issued multiple subpoenas and demands, turning down Mylan’s attempts to close its investigation. The department also informed Mylan of its intent to file a lawsuit if the company didn’t settle. In October 2016, Mylan finally decided on a $465 million settlement with the Justice Department.
Antonia Chion, associate director in the SEC’s division of enforcement said, “As alleged in our complaint, 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. 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.”
“Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules,” Acting U.S. Attorney William Weinreb said.
“Bringing closure to this matter is the right course of action for Mylan and our stakeholders to allow us to move forward,” Mylan Chief Executive Heather Bresch.
A U.S. Department of Health and Human Services’ Office of Inspector General data reported the government may have overpaid for EpiPen by up to $1.27 billion in the decade between 2006 and 2016.
There is an ongoing shortage of the medication. An announcement from the Food Allergy Research & Education (FARE) declared, “Currently, EpiPen, EpiPen Jr and Adrenaclick remain in either a spot shortage or constrained supply. There are now a number of other products available at most pharmacies, including Auvi-q, the Teva manufactured generic auto-injector for adults and children, and Symjepi, the epinephrine pre-filled syringe. Ask your doctor if any of the products not in shortage will work for you.”