Mylan (MYL) to Pay $465M to Settle EpiPen Medicaid Rebate Classification; Lowers FY16 Outlook
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Mylan N.V. (NASDAQ: MYL) today announced that its subsidiary, Mylan Inc., has agreed to the terms of a $465 million settlement with the U.S. Department of Justice ("DOJ") and other government agencies that will resolve questions that have been raised about the classification of EpiPen® Auto-Injector and EpiPen Jr® Auto-Injector (collectively, "EpiPen Auto-Injector") for purposes of the Medicaid Drug Rebate Program.
The terms of the settlement do not provide for any finding of wrongdoing on the part of Mylan Inc. or any of its affiliated entities or personnel. The question in the underlying matter was whether EpiPen Auto-Injector was properly classified with the Centers for Medicaid and Medicare Services ("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 terms provide for resolution 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. In connection with the settlement, Mylan expects to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. Mylan will continue to work with the government to finalize the settlement.
Mylan CEO Heather Bresch commented, "This agreement is another important step in Mylan's efforts to move forward and bring resolution to all EpiPen Auto-Injector related matters. The agreement is in addition to the significant steps Mylan has taken in relation to EpiPen Auto-Injector over the past several weeks, including the unprecedented, pending launch of a generic version of EpiPen Auto-Injector and expansion of our patient access programs for this product. Entering into this settlement is the right course of action at this time for the Company, its stakeholders and the Medicaid program."
Mylan will include a pre-tax charge of approximately $465 million in the quarter ended Sept. 30, 2016 as a result of this settlement.
2016 Earnings Guidance Update
Mylan also announced it expects full year 2016 adjusted diluted earnings per ordinary share ("EPS") to be between $4.70 - $4.90, as compared to the previously communicated full year guidance range of $4.85 - $5.15. The majority of this change in full year 2016 adjusted EPS guidance is the result of the previously announced changes in EpiPen Auto-Injector access programs and the upcoming launch of the generic to EpiPen Auto-Injector. These initiatives seek to further enhance access to, and affordability of, EpiPen Auto-Injector. Much of the impact of this guidance change will occur in the third quarter.
Mylan remains committed to its target of at least $6.00 in adjusted EPS in 2018.
Mylan is not providing forward looking guidance for full year 2016 U.S. GAAP EPS guidance or a reconciliation of full year 2016 adjusted EPS to U.S. GAAP EPS because Mylan is unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort. These items include, but are not limited to, acquisition-related expenses including those related to the recently closed Meda transaction, restructuring expenses, asset impairments, litigation settlements, changes to contingent consideration and certain other gains or losses. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP EPS for the guidance period.
Mylan to Report Third Quarter 2016 Financial Results on Nov. 9, 2016
Mylan will host a conference call and live webcast, on Wednesday, Nov. 9, 2016 at 4:30 p.m. ET, to review the Company's financial results for the third quarter ended Sept. 30, 2016. Mylan will release its financial results on Nov. 9 after the close of the U.S. financial markets.
The dial-in number to access the earnings call is 800.514.4861 or 678.809.2405 for international callers. To access the live webcast, please log on to Mylan's website, mylan.com, at least 15 minutes before the event is scheduled to begin to register and download or install any necessary software. A replay of the webcast will be available at mylan.com/investors, for a limited time.
Mylan now intends to hold its investor day in conjunction with the release of its fourth quarter results.
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