DENVER- Attorney General Cynthia H. Coffman announced today that the State of Colorado has agreed to join the United States and other states to settle allegations against Mylan Inc. and Mylan Specialty L.P. (collectively “Mylan”). Mylan allegedly knowingly underpaid rebates owed to the Medicaid program for the drugs EpiPen® and EpiPen Jr.® (“EpiPen”). Under the terms of the settlement, Mylan will pay $465 million to the United States government and the individual States effected. As part of the settlement the State of Colorado will recover $5.5 million in restitution for its Medicaid program.
“Companies who try to rip-off Medicaid are taking money that could and should be used to better serve some of our most vulnerable citizens. This office, including our Medicaid Fraud Control Unit, will continue to vigorously defend the integrity of the state’s Medicaid program and hold accountable those who try to loot the state coffers for their private interests,” said Attorney General Coffman. “Attempts by pharmaceutical companies like EpiPen Manufacturer Mylan, to avoid their obligations to state Medicaid programs will not be tolerated.”
Mylan misclassified EpiPen as a generic drug, despite the fact that it had no FDA-approved equivalents and was being marketed and priced by Mylan as a brand name drug. Between 2010 and 2016 Mylan raised the price of EpiPen by approximately 400% and the federal and state governments contend that Mylan used this misclassification of EpiPen to avoid paying state Medicaid programs the rebates to which they were entitled.
Congress enacted the Medicaid Drug Rebate Program as a cost containment measure for the payment of outpatient drugs to ensure that state Medicaid programs were not susceptible to price gouging by manufacturers of drugs that were available from only a single source. Under the terms of the program, manufacturers are required to pay quarterly rebates to State Medicaid programs for drugs dispensed to Medicaid beneficiaries. Single-source, or brand name drugs, are subjected to a higher rebate that includes any difference between the drug’s current price and the price the drug would have had if its price had increased only at the general rate of inflation. In contrast, generic drugs originating from multiple manufacturers are subject to lower rebates that, at least until recently, did not include an inflationary component. The drug manufacturer is required to properly classify the drug so that the proper rebate can be calculated.
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 which include Mylan Specialty, a Delaware limited partnership with its principal place of business in Morgantown, West Virginia that owns the exclusive rights to sell EpiPen in the United States.
The investigation stemmed from two qui tam (whistleblower) lawsuits alleging claims under federal and state false claims acts, 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. Both lawsuits included claims under Colorado’s Medicaid False Claims Act.