West Virginia urges Justice Dept to reject settlement with Mylan

November 2, 2016 12:47 PM EDT

Mylan NL CEO Heather Bresch testifies before a House Oversight and Government Reform Committee hearing on the Rising Price of EpiPens at the Capitol in Washington, U.S., September 21, 2016. REUTERS/Yuri Gripas


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By Sarah N. Lynch

WASHINGTON (Reuters) - West Virginia Attorney General Patrick Morrisey on Wednesday blasted Mylan NV's announced $465 million settlement with the U.S. Justice Department over the drugmaker's classification of its lifesaving allergy treatment EpiPen as a generic, saying the amount was "woefully deficient."

The department has not acknowledged such a deal almost a month after Mylan announced it, and department spokeswoman Nicole Navas declined to comment on Wednesday.

A spokesperson for Mylan did not respond to requests for comment.

In a Nov. 2 letter to Attorney General Loretta Lynch, Morrisey said there were no reports that such a deal had been finalized. But he urged the department to reject the $465 million figure because it "does not nearly pay for the damage done by Mylan."

Mylan has come under fire for hiking the price of EpiPen to more than $600 for a package of two in less than a decade. Mylan's Oct. 7 announcement about the settlement came just months after congressional scrutiny into the issue began.

For years, the company had classified EpiPen as a generic drug instead of a branded one, resulting in smaller rebates to state and federal Medicaid programs.

Morrisey said Mylan should not be allowed to receive a "windfall after flagrantly defrauding the Medicaid Drug Rebate Program."

The Medicaid rebate for a generic is 13 percent compared with a minimum 23.1 percent for a branded drug.

Morrisey in August started conducting an investigation into the rebates and antitrust concerns as to whether Mylan took steps to block market competition. The probe became public in September after Morrisey filed an action against Mylan for allegedly refusing to comply with a subpoena.

Curtis Johnson, a spokesman for his office, confirmed the investigation was still ongoing.

The New York Attorney General is also investigating whether Mylan broke antitrust laws in writing contracts to provide EpiPens to school systems.

Centers for Medicare and Medicaid Services Acting Administrator Andrew Slavitt revealed in an Oct. 5 letter to lawmakers that the centers had on "multiple occasions" provided guidance to the industry and Mylan about the proper classification of drugs.

Until Oct. 7, the company had not told shareholders about the possible misclassification of the EpiPen or the pending settlement with the Justice Department.

That day, Mylan also revealed that the U.S. Securities and Exchange Commission had launched an investigation and was seeking copies of its communications with the centers and documents related to the Medicaid rebate program.

Senate Judiciary Chairman Charles Grassley, an Iowa Republican, plans to hold a hearing on Nov. 30 to scrutinize the terms of the purported settlement. One topic that could also come up at the hearing is the question of how EpiPen price spikes have affected the U.S. military's spending.

Last week, Reuters reported that nearly half of the Pentagon's spending on EpiPens was at retail pharmacies, which do not give the same government discounts as medical treatment centers.

As a result, Pentagon spending on EpiPens rose to $57 million over the past year, from $9 million in 2008.

Grassley, as well as Senate Democrats Amy Klobuchar and Richard Blumenthal, have responded by sending letters to the Department of Defense and Department of Veterans Affairs seeking further details to determine whether they might be owed rebates.

On Tuesday, 17 U.S. Senate Democrats sent a letter to Mylan asking a variety of questions and demanding copies of all of the guidance that Mylan received from the centers about the classification since 2007, when Mylan acquired the company that owned the EpiPen.

(Reporting by Sarah N. Lynch; additional reporting by Caroline Humer in New York; Editing by Richard Chang)



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