Mylan’s Settlement With DOJ Not Tough Enough, Senator Says

(Bloomberg) -- Mylan NV’s $465 million settlement with the U.S. Department of Justice over Medicaid rebates for its EpiPen allergy shot is a “sweetheart deal,” and the company should face a criminal investigation, Senator Richard Blumenthal said Wednesday.

Medicaid, which provides health insurance to the poor in the U.S., gets a 23 percent discount on brand-name drugs and a 13 percent discount on generic drugs. EpiPen had been classified incorrectly as a generic since at least 1997, both by Mylan and previous makers of the life-saving medicine, according to the Centers for Medicare and Medicaid Service.

Blumenthal, a Democrat from Connecticut, said on Bloomberg TV that the settlement was “inadequate” given the financial shortfall may be more than $700 million, and there may also be state money that should be recovered. A former federal prosecutor and Connecticut attorney general, he said Mylan may have deliberately misclassified the EpiPen.

Mylan’s Oct. 7 settlement appeared to resolve accusations that the drugmaker hadn’t been giving the government the required Medicaid discounts for its EpiPen. The quick resolution followed weeks of scrutiny by Congress and others over the company’s price hikes for the treatment. Mylan, based in the Netherlands and run from Canonsburg, Pennsylvania, acquired rights to sell the shot in 2007. Since then it has raised the price by about sixfold, to about $600 per two-pack.

Federal Investigation

“Most important to me is the lack of a complete investigation,” Blumenthal said. “That amount of money may be woefully short of what it should be. We have no way of knowing until the Department of Justice completes this investigation.”

Mylan spokeswoman Nina Devlin declined to comment.

The Department of Justice has declined to comment on Mylan’s announcement of a settlement, an indication that an agreement may not be final and the two sides are still discussing final details of an accord.

Congress began raising questions about EpiPen pricing in August, eventually hearing testimony from Chief Executive Officer Heather Bresch, and in September asked about Medicaid payments. Why a settlement came so quickly is one of the “key questions” that Blumenthal hopes will be answered by a criminal investigation. He said the way to achieve “deterrence” and “accountability” is by holding individuals responsible, and criminal charges should be filed if needed.

Blumenthal previously wrote a letter that described the settlement as “a shadow of what it should be” and criticized it for not requiring Mylan to admit to any wrongdoing. 

The senator later said in an off-camera interview that the U.S. Department of Health and Human Services ought to be embarrassed over the misclassification. An HHS spokeswoman declined to comment.

To contact the reporter on this story: Jared S. Hopkins in New York at jhopkins38@bloomberg.net. To contact the editors responsible for this story: Cecile Daurat at cdaurat@bloomberg.net, John Lauerman