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A.G. Schneiderman Announces $465 Million Joint State-Federal Settlement With Mylan, Maker Of Epipens

New York Leads Coalition Of States In Settlement Of Allegations That Mylan Knowingly Underpaid Medicaid, Costing Taxpayers Millions

Settlement Will Return $38.5 Million To New York

Schneiderman: Efforts To Shortchange Medicaid Will Not Be Tolerated

Attorney General Eric T. Schneiderman recently announced that New York has agreed in principle to join a state-federal $465 million settlement with Mylan Inc. and its wholly owned subsidiary, Mylan Specialty L.P.—collectively known as “Mylan.” New York led a coalition of states in the investigation that resolved allegations that Mylan knowingly underpaid rebates owed to Medicaid for the drugs EpiPen® and EpiPen Jr.® (“EpiPen”) that were dispensed to Medicaid beneficiaries. Under the settlement, New York will receive $38.5 million.

“For nearly seven years, Mylan prioritized its bottom line – and shortchanged the Medicaid program and taxpayers. By misclassifying EpiPen, Mylan attempted to sidestep their obligations, leaving taxpayers to foot the bill,” said Attorney General Schneiderman. “Pharmaceutical companies should be warned: efforts to shortchange Medicaid will not be tolerated, and we’ll ensure that these companies are held accountable.”

Following a joint federal and state investigation, the settlement resolves allegations that Mylan submitted false statements to the Centers for Medicare and Medicaid Services (CMS) and several states reliant on EpiPen rebates, and knowingly underpaid its obligations for Medicaid drug rebates to the State Medicaid Program for EpiPen.

Under the Medicaid Drug Rebate Statute, participating pharmaceutical manufacturers or New Drug Code (NDC) holders, such as Mylan, must 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 pay quarterly rebates to state Medicaid programs for drugs dispensed to Medicaid beneficiaries. Additionally, NDC holders are required 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.

The settlement resolves allegations that, between July 29, 2010 and March 31, 2017, Mylan allegedly 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, and failed to report a Best Price to CMS for EpiPen, which is required for all “single source” and “innovator multiple source” drugs. As a result, Mylan submitted false statements to CMS and several states reliant on EpiPen rebates, and knowingly underpaid its obligation for Medicaid drug rebates to the State Medicaid Program for EpiPen.

Today’s settlement 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 whistleblower, or “qui tam,” actions pending in the United States District Court for the District of Massachusetts, which allege claims under the federal False Claims Act and various state false claims statutes that Mylan underpaid its rebate obligations to states.

New York’s claims in the case were handled by the Attorney General’s Medicaid Fraud Control Unit (MFCU), which worked closely with the United States Attorney’s Office for the District of Massachusetts, the United States Department of Justice, and a multi-state team that included representatives from the Offices of the Attorneys General for California, North Carolina, South Carolina, Washington, and the Commonwealths of Massachusetts and Virginia. New York was also assisted by representatives of the New York State Department of Health’s Office of Health Insurance Programs, headed by Deputy Commissioner Jason A. Helgerson.

New York MFCU’s Chief of the Civil Enforcement Division Carolyn T. Ellis led the multi-state team that negotiated the settlement with Mylan for the states. Senior Auditor-Investigator Matthew Tandle was a member of the state team, assisted by Auditor Investigator Emily Brissette, under the supervision of Stacey Millis, Regional Chief Auditor of the Civil Enforcement Division.

The Medicaid Fraud Control Unit is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. The Division of Criminal Justice is led by Chief Deputy Attorney General Jason Brown.