In August of 2017, the massive pharmaceutical conglomerate Mylan underwent allegations that they deliberately violated the False Claims Act in order to avoid paying Medicaid rebates, resulting in a $465 million settlement. According to the Department of Justice, the company misclassified their pioneer drug, EpiPen, as a generic in order to avoid paying appropriate Medicaid rebates – and in doing so, bilked the government healthcare program for billions.
In order to commit these fraudulent acts, the company testified that the epinephrine auto-injector drug, most frequently used for those suffering from anaphylaxis or other allergic reactions, was classified as a generic, although it was marketed and manufactured as a brand-name drug. In claiming this, they were able to effectively dodge paying Medicaid rebates under the Medicaid Drug Rebate Program.
This program, conceived to prevent manufacturers from unnecessarily raising the price of medications that are only available from a single source, ensures that Medicaid and its beneficiaries are receiving drugs at only cost plus standard rates of inflation, and are therefore not subjected to companies arbitrarily charging more for the same product. The program charges a much lower rebate rate for generic drugs versus those that are marketed as brand-names, a policy that Mylan was quick to take advantage of.
Mylan, who has also been recently scrutinized for their blatant price-gouging tactics on the drug in question, were ordered as part of the settlement to enter into a “corporate integrity agreement,” under which the Office of the Inspector General is permitted to evaluate various aspects of their compliance with the Medicaid Drug Rebate Program on an annual basis.
After Mylan acquired the rights to the drug in 2007, the price skyrocketed over 400% in under a decade, resulting in public outcry as the life-saving drug was being sold for $600 per two injectors. Following this settlement, the manufacturer agreed to retroactively (to April 1, 2017) pay the brand-name rebate rate; though it has not been disclosed what this rate is, a government source reported that it will likely be close to 100% of Mylan’s EpiPen sales through Medicaid. The sheer fact that this figure is so high clearly demonstrates that the rebate program charges a significantly higher rate for brand-name medications than it would for their generic counterparts.
This matter was brought to light in 2014 by Sanofi, one of Mylan’s competitors who manufacture another auto-injector which serves the same medicinal purpose. Under the qui tam provisions of the False Claims Act, they filed a complaint in 2016 stating that Mylan was unlawfully classifying EpiPens as generics in order to receive the lower rebate rate, and thus depriving those in need of the drug the ability to obtain it at an affordable price.
Although a substantial sum was recovered, many believe that the company was let off easy; a government report found that taxpayers may have overpaid up to $1.27 billion for EpiPen over the last ten years, of which $465 million seems like mere pocket change.
“Quite simply, the Department of Justice is letting this deceptive pharmaceutical behemoth off the hook,” Senator Blumenthal of Connecticut said in a statement. “Absolving Mylan from a finding of wrongdoing has cleared the way for the company to pocket the money it embezzled from an American public in desperate need of lifesaving and affordable medications.”
Although it is uncertain that Mylan will ever be held fully accountable for the funds they blatantly bilked from Medicaid, the settlement paves the way for a more honest and transparent relationship between the company and the government. The commendable actions of Sanofi in bringing this case forward were rewarded with a $38.7 million share of the recovered funds and will hopefully encourage others, individuals and companies alike, to disclose any and all dishonest practices that take place in the famously corrupt pharmaceutical world.
Whistleblower Justice Network Can Help You
Whistleblower Justice Network partners with whistleblowers to bring those who knowingly defraud the Medicaid program to justice. Although this case is unique in the fact that an entire company filed a claim, it only takes one individual to make a difference and prevent those who take advantage of our nation’s most needy from further profiting through deception.
If you have meaningful information regarding pharmaceutical fraud that you believe is in violation of the False Claims Act, Whistleblower Justice Network can help. Working alongside world-class legal counsel, we will ensure you are protected to the fullest extent of the law and that you receive credit for the information you bring to the U.S. government. Partnering with whistleblowers is all we do. Visit us at www.whistleblowerjustice.net, or call us at 844-WJN-4ALL.
