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Pharmaceutical Companies Agree to Pay $465 Million Settlement in EpiPen False Claims Act Lawsuit

On Thursday, August 17, 2017, the Department of Justice, announced that Mylan Inc. and Mylan Specialty L.P. (collectively, “Mylan”) have settled allegations that they violated the False Claims Act when they misclassified EpiPen as a generic drug as part of a scheme to avoid paying rebates owed to the federal government. Mylan has agreed to pay $456 million in restitution for the government’s monetary losses from the alleged misconduct, though it has not admitted liability and the claims settled remain allegations only. Additionally, Mylan has signed up to a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General that will require an independent organization to review multiple aspects of Mylan’s relations with the Medicaid Drug Rebate Program.

The Medicaid drug rebate requirements that Mylan allegedly sought to avoid were enacted by Congress to prevent drug manufacturers from gouging state Medicaid programs on prices for pharmaceuticals that are only available from a single source. The Medicaid Drug Rebate Program requires manufacturers of such single-source, or “brand name,” drugs, to pay a higher rebate to Medicaid that increases to the extent the price of the drug outpaces the rate of inflation. Mylan is alleged to have knowingly misclassified EpiPen as a generic drug, despite the absence of any therapeutically equivalent drugs. This, combined with a 400 percent increase in the price of EpiPen from 2010 to 2016, resulted in Mylan paying lower rebates to Medicaid than it would have had it classified EpiPen properly. United States Attorneys stated that, in their view, Mylan misclassified EpiPen specifically “to profit at the expense of the Medicaid program.”

The allegations against Mylan were brought to court by pharmaceutical manufacturer Sanofi-Aventis US LLC under a provision of the False Claims Act that permits private qui tam whistleblowers to sue alleged wrongdoers on behalf of the federal government. Once a False Claims Act lawsuit is filed, federal prosecutors can intervene, as they did in this case, to prosecute the case on behalf of the government. The allegations against Mylan were the subject to an investigation by several state attorneys general, the Department of Justice, and other agencies of the federal government.

Businesses often seek to illegally profit from government programs that millions of Americans depend on to meet their basic needs. Corporate whistleblowers and qui tam law firms are key to the fight against healthcare fraud. If you are aware of a company that is engaging in a fraudulent practice, do not hesitate to take action. 

© 2019 by Tycko & Zavareei LLP

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About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...

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