Mylan agrees to pay $465 million to settle claims of EpiPen misclassification; lowers earnings

Mylan on Friday said it will pay $465 million to the US Department of Justice to settle claims related to the classification of EpiPen (epinephrine) under the Medicaid rebate programme.  The company noted that the settlement, under which the drugmaker admits no wrongdoing, resolves "all potential rebate liability claims by federal and state governments." Shares in Mylan jumped as much as 10 percent on the news. 

Based on the settlement, Mylan disclosed that it will reduce its full-year earnings guidance to a per-share range of $4.70 to $4.90, down from prior guidance of $4.85 per share to $5.15 per share. The company added that it will take a pre-tax charge of approximately $465 million for the quarter ended September 30 related with the settlement.

Earlier this week, the US Department of Health and Human Services' Centers for Medicare and Medicaid Services (CMS) revealed that Mylan had overcharged the government for EpiPen for several years. In the disclosure, which came after three US senators asked the Justice Department to open an investigation into the classification of EpiPen, CMS noted that Mylan had paid a rebate of 13 percent of EpiPen's list price based on the drug's classification as a non-innovator drug, as opposed to a rebate of 23.1 percent for branded drugs. 

Mylan CEO Heather Bresch remarked "this agreement is another important step in Mylan's efforts to move forward and bring resolution to all EpiPen Auto-Injector related matters," adding "entering into this settlement is the right course of action at this time for the company, its stakeholders and the Medicaid programme." 

Mylan has received scrutiny from lawmakers over the rapid growth in the price of EpiPen after acquiring the therapy in 2007. Although Bresch defended the company's pricing practices in a congressional hearing, she subsequently informed Congress that its profits on EpiPen were higher than stated in the hearing. Members of the US House Committee on Oversight and Government Reform called on Mylan to explain the discrepancy. 

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