Mylan Finalizes Settlement Agreement on Medicaid Rebate Classification for EpiPen® Auto-Injector

The Centers for Medicare & Medicaid Services announced an agreement with Mylan regarding the classification of EpiPen in which Mylan will reclassify EpiPen as a brand name drug consistent with the Medicaid statute and regulations. In addition, Mylan has agreed to use the correct reference price of the 3rd quarter of 1990 for the purpose of calculating inflationary payment rebates under the Medicaid Drug Rebate (MDR) program, saving the Medicaid program hundreds of millions of dollars. These changes will be effective retroactive to April 1, 2017.

“Mylan’s agreement with CMS to correctly classify EpiPen is a huge win for Medicaid beneficiaries and American taxpayers,” said CMS Administrator Seema Verma. “Medicaid will no longer be overcharged for EpiPen, protecting access for Medicaid beneficiaries who rely on this life-saving 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 settlement resolves claims relating to the classification of EpiPen® Auto-Injector and EpiPen Jr® Auto-Injector for purposes of the Medicaid Drug Rebate Program. The question in the underlying matter was whether the EpiPen products were properly classified with CMS as a non-innovator drug under the applicable definition in the Medicaid Rebate statute and subject to the formula that is used to calculate rebates to Medicaid for such drugs. EpiPen Auto-Injector has been classified with CMS as a non-innovator drug since before Mylan acquired the product in 2007 based on longstanding written guidance from the federal government.

The settlement provides for resolution of all potential Medicaid rebate liability claims by the federal government, as well as potential claims by certain hospitals and other covered entities that participate in the 340B Drug Pricing Program. The settlement allocates money to the Medicaid programs of all 50 states and establishes a framework for resolving all potential state Medicaid rebate liability claims within 60 days. In connection with the settlement, Mylan also has entered into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. The settlement does not contain an admission or finding of wrongdoing. Mylan will reclassify EpiPen Auto-Injector for purposes of the Medicaid Drug Rebate Program and pay the rebate applicable to innovator products effective as of April 1, 2017.