State to receive approximately $3 million in Epipen settlement

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Attorney General Peter F. Kilmartin announced that Rhode Island has agreed in principle to join the United States and other states to settle allegations 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”) dispensed to Medicaid beneficiaries.

Under the settlement, Mylan will pay $465 million to the United States and the states. The states will share $213,936,000 of the total settlement. As part of the settlement, Rhode Island’s Medicaid program is set to receive $2,969,016 in restitution and other recovery.

“Mylan chose profits over following the rules and employed deceptive practices at the expense of the State’s Medicaid program,” said Kilmartin. “It is that type of corporate greed that has helped drive up the costs of health care for individuals and states.”

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. Mylan Specialty is a Delaware limited partnership with its principal place of business in Morgantown, West Virginia. 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.

The Medicaid Drug Rebate Statute was enacted by Congress in 1990 as a cost containment measure for Medicaid’s payment for outpatient 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 provide information to CMS concerning their covered drugs. In particular, they have to advise 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 the Centers for Medicare and Medicaid Services (“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.

Mylan’s settlement with the United States also resolves allegations that Mylan Specialty overcharged certain entities (known as the “340B Covered Entities”) that participated in the 340B Drug Pricing Program, 42 U.S.C. § 256b.

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 and various state false claims statutes that Mylan underpaid its rebate allegations to the States.

A National Association of Medicaid Fraud Control Units (“NAMFCU”) Team participated in the settlement negotiations with Mylan on behalf of the states and included representatives from the Offices of the Attorneys General for the states of California, New York, North Carolina, South Carolina, Washington, and the Commonwealths of Massachusetts and Virginia.

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