{"id":4425,"date":"2016-10-14T23:41:00","date_gmt":"2016-10-14T23:41:00","guid":{"rendered":"https:\/\/www.healthlawpolicymatters.com\/?p=4425"},"modified":"2021-11-02T23:42:54","modified_gmt":"2021-11-02T23:42:54","slug":"five-things-to-know-about-the-mylan-epipen-settlement-what-it-is-and-what-it-isnt","status":"publish","type":"post","link":"https:\/\/www.healthlawpolicymatters.com\/2016\/10\/14\/five-things-to-know-about-the-mylan-epipen-settlement-what-it-is-and-what-it-isnt\/","title":{"rendered":"Five Things to Know About the Mylan EpiPen \u201cSettlement\u201d \u2013 What It Is and What It Isn\u2019t"},"content":{"rendered":"\n

Our eyebrows were raised by Mylan\u2019s October 7, 2016\u00a0announcement<\/a>\u00a0that it had reached a $465 million \u201csettlement\u201d with the United States Department of Justice (DOJ) and \u201cother government agencies\u201d over its Medicaid Drug Rebate obligations for EpiPen.\u00a0 The timing of the announcement was especially eyebrow-raising:\u00a0 close to 5 pm on a Friday afternoon at the start of a long holiday weekend (Columbus Day), which effectively forestalled any government comment on the announcement.<\/p>\n\n\n\n

Let\u2019s recap how we got here. Over the last few months, multiple state and federal government entities, including Congress, had raised concerns about the EpiPen\u2019s classification for the purpose of Medicaid Drug Rebates.  Manufacturers pay lower Medicaid rebate percentages on generic drugs than on brand name or innovator drugs.  Manufacturers also face a Medicaid Drug Rebate \u201cinflation penalty\u201d when price increases for brand name\/innovator drugs outpace inflation; generic drugs are exempt from the inflation penalty.   But the \u201cEpi\u201d part of EpiPen was the generic drug epinephrine; it was the \u201cPen\u201d part, the distribution unit, which was patented and unique.  More than 18 years ago, CMS said that it was reasonable to base EpiPen Medicaid Drug rebates on the \u201cEpi\u201d part, as a generic product.  Thus Mylan paid Medicaid drug rebates on EpiPen at the generic rate and faced no inflation penalty.   But earlier this year, after media reports focused on dramatic price increases for EpiPen and the lack of competitor products, questions have been raised as to whether Mylan knew, or should have known, that it needed to revisit the EpiPen classification and pay the higher higher brand\/innovator Medicaid Drug Rebate rates, and face the inflation penalty, for EpiPen.<\/p>\n\n\n\n

Mylan\u2019s announcement states that the $465 million settlement provides \u201cresolution of all potential rebate liability claims by federal and state governments as to whether the product should have been classified as an innovator drug for CMS purposes and subject to a higher rebate formula.\u201d   But in the days following the Columbus Day holiday, details on the specifics of the settlement have not been forthcoming from Mylan or the government.<\/p>\n\n\n\n

So as a result of the Mylan announcement, what do we know and what do we not know about the purported settlement?  Here are our top five takeaways from Mylan\u2019s announcement.<\/p>\n\n\n\n

1.     We think, but cannot be sure, that Mylan\u2019s announcement likely represents the outline of a Civil False Claims Settlement based on Mylan\u2019s alleged underpayment of EpiPen Medicaid Drug Rebate. Put another way, this is likely a handshake deal; we do know that actual settlement agreements have not been executed.<\/p>\n\n\n\n

2.\u00a0\u00a0\u00a0\u00a0 According to Mylan, the terms of the settlement \u201cdo not provide for any finding of wrongdoing on the part of Mylan or any of its affiliated entities or personnel.\u201d But many Civil False Claims settlements are accompanied by a criminal settlement, which would include findings and an admission of some wrongdoing.\u00a0\u00a0 We don\u2019t know whether, in the absence of a full investigation, DOJ has really agreed to provide a criminal release for Mylan as part of this settlement. Moreover, we don\u2019t know whether, in the absence of full investigation, DOJ has really agreed that as part of the corporate settlement, it will dodge the requirements of the\u00a0Yates memo<\/a>, and also provide a criminal and civil release for all Mylan personnel, including executives and managers.<\/p>\n\n\n\n

3.\u00a0\u00a0\u00a0\u00a0 A corollary takeaway involves HHS-OIG. The Mylan announcement indicates the company \u201cexpects to enter\u201d a Corporate Integrity Agreement with HHS-OIG, meaning one has yet to be negotiated. But that is not the only HHS-OIG role in any settlement of this matter. We know that HHS-OIG specifically reserves its right to consider corporate and individual officer\/manager exclusion for corporate False Claims settlements, and recently updated some of its governing\u00a0policies<\/a>\u00a0on\u00a0such exclusions<\/a>. We also know that DOJ cannot settle or waive exclusion issues for HHS-OIG. We don\u2019t know what, if any, position HHS-OIG has taken on the settlement.<\/p>\n\n\n\n

4.     The deal reached on Medicaid Drug Rebates is with US DOJ and \u201cother government agencies\u201d to resolve all<\/strong> potential rebate liability claims by federal and state governments. We do know that in fact, Medicaid Drug Rebates are paid to State Medicaid Agencies; while the amount of rebates the states get to retain will vary from state to state, on average it is close to 50% and closer to 55% if a settlement on Medicaid Drug Rebates is based on false claims liability. We also know that DOJ does not have the authority to settle states\u2019 individual drug rebate claims against Mylan, which means any potential \u201cglobal\u201d settlement with the states raises a variety of issues, including:<\/p>\n\n\n\n