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Office of the Vermont Attorney General

Attorney General TJ Donovan Announces False Claims Act Settlement with Mylan re Epipen

October 3, 2017

CONTACT: Jason Turner, Assistant Attorney General, (802) 828-5332

Attorney General TJ Donovan announced today that the State of Vermont has agreed in principle to join the Federal Government and other States to settle allegations under the Vermont False Claims Act against Mylan Inc. and its wholly-owned subsidiary, Mylan Specialty L.P. (collectively “Mylan”). The settlement will resolve allegations that Mylan knowingly underpaid rebates owed to the Medicaid program for the drugs EpiPen® and EpiPen Jr.® (“EpiPen”). Under the settlement, Mylan will pay $465 million to the United States and the States. The total portion of the settlement attributable to Vermont is $983,198.

Mylan Inc. is a Pennsylvania corporation with its principal place of business in Canonsburg, Pennsylvania. It manufactures, markets and sells pharmaceuticals through its wholly-owned subsidiaries, including Mylan Specialty. Mylan Specialty owns the exclusive rights to sell EpiPen in the United States and possesses legal title to the New Drug Codes (“NDCs”) for EpiPen. EpiPen is an epinephrine autoinjector for injecting a measured dose or doses of epinephrine (adrenaline) for the treatment of anaphylaxis resulting from allergic reactions.

The Medicaid Drug Rebate Statute was enacted by Congress in 1990 as a way to cap how much Medicaid reimburses for drugs. That statute requires participating pharmaceutical manufacturers or NDC holders, such as Mylan, to sign a Rebate Agreement with the Secretary of the United States Department of Health and Human Services as a precondition for obtaining Medicaid coverage for their drugs and to pay quarterly rebates to State Medicaid programs for drugs dispensed to Medicaid beneficiaries. NDC holders are required to advise the Centers for Medicare and Medicaid Services (“CMS”) regarding the classification of a covered drug as an “innovator” or “noninnovator” drug, as the amount of rebates owed varies depending on the drug’s classification. The amount of the rebate also depends on pricing information provided by the manufacturer. For drugs classified as “innovator” drugs, NDC holders must report their “Best Price,” or the lowest price for which it sold a covered drug in a particular quarter.

Specifically, this settlement resolves allegations that from July 29, 2010, to March 31, 2017, Mylan submitted false statements to CMS that incorrectly classified EpiPen as a “noninnovator multiple source” drug, as opposed to a “single source” or “innovator multiple source” drug, as those terms are defined in the Rebate Statute and Rebate Agreement. Mylan also did not report a Best Price to CMS for EpiPen, as that term is defined in the Rebate Statute and Agreement, which it was required to do for all “single source” and “innovator multiple source” drugs. As a result, Mylan submitted or caused to be submitted false statements to CMS and/or the States relating to EpiPen for Medicaid rebate purposes, and underpaid its EpiPen rebates to the State Medicaid Programs.

The investigation stemmed from two qui tam actions, United States ex rel. sanofi-aventis US LLC v. Mylan Inc., et al. (No. 16-cv-11572-ADB), and United States ex rel. Ven-A-Care of the Florida Keys, Inc. v. Mylan Inc., et al. (No. 17-10140-ADB), pending in the United States District Court for the District of Massachusetts. The qui tam actions alleged claims under the Federal False Claims Act, the Vermont False Claims Act, and other states’ false claims statutes that Mylan underpaid its rebate allegations to the States.

Last modified: March 12, 2018