On Thursday, August 17, 2017, CMS posted a notice regarding the execution of a settlement agreement entered into August 16, 2017 on its website concerning Mylan Inc. and Mylan Specialty L.P., and 340B pricing for EpiPen. According to the notice, Mylan will reclassify EpiPen Auto-Injector and EpiPen Jr. Auto-Injector as brand name drugs consistent with the Medicaid statute and regulations. Mylan will use the reference price of the 3rd quarter of 1990 for the purpose of calculating inflationary payment rebates under the Medicaid Drug Rebate program. The changes will be retroactive to April 1, 2017.
Mylan agreed to the $465 million settlement to resolve allegations of violation under the False Claims Act by misclassifying EpiPen as a generic drug to avoid paying rebates to Medicaid, even though EpiPen had no FDA-approved equivalents. The United States Department of Justice asserted Mylan submitted false claims relating to the classification of EpiPen for Medicaid rebate purposes, underpaid rebates to Medicaid for EpiPen, and overcharged 340B Covered Entities that participated in the 340B Drug Pricing Program. Mylan increased the price of EpiPen by 400% between 2010 and 2016. The $465 million settlement provides a resolution of all potential Medicaid rebate liability claims by the federal government, as well as certain hospitals and other 340B covered entities that participate in the 340B Drug Pricing Program. It also establishes a framework to resolve all rebate liability claims within 60 days and establishes a five year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services to annually review Mylan's practices relating to drug rebates.
The 340B Covered Entities Settlement is as follows:
Mylan to pay $19.3 million to the 340B Covered Entities
Within 180 days of the settlement agreement, Mylan will issue a report to the United States which documents the amounts needed to pay each 340B Covered Entity for any alleged overcharges including each entity's proportionate share of accrued interest and contains the calculations used to determine the amount
Within 30 days of the report, Mylan will issue checks to each 340B Covered Entity in the amounts determined
If any check is not cashed within 180 days of issuance, Mylan will notify the Civil Division of the United States Department of Justice within 10 business days after the expiration of the 180-day period. All remaining assets will be transfered to the United States within 5 days after receiving written instructions from the DOJ.
Upon full payment of the Federal and 340B Settlement Amounts, Mylan is released from any and all claims.
Per the CMS website notice, CMS Administrator Seema Verma stated, “Medicaid will no longer be overcharged for EpiPen, protecting access for Medicaid beneficiaries who rely on this lifesaving drug while saving hundreds of millions of dollars. This announcement puts drug manufacturers on notice that CMS remains vigilant in our duty to protect the integrity of the Medicaid program.”
The Justice Department settlement with Mylan can be viewed in its entirety here.
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