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The Pittsburgh-area pharmaceutical company that owns the rights to a specialized allergy medicine has been ordered to pay Delaware nearly $900,000 for shortchanging the state’s Medicaid program, according to a statement from the state Department of Justice.
The DOJ says Mylan Inc. “knowingly” misidentified as “generic” its brand-name drug and injection device, EpiPen, in order to reduce the amount of mandated rebates paid to Delaware.
EpiPens can reverse the lethal reactions suffered by individuals who are allergic to insect bites or stings, foods, medications and latex. The pen, once injected into the thigh, releases epinephrine, a medication that relaxes muscles in the airway to reduce swelling.
Steve Groff, director of the state Division of Medicaid and Medical Assistance, said the settlement dollars will “offset future spending” in Medicaid operations.
“While the EpiPen settlement is a particularly large one, our Medicaid program generally gets a few of these a year and they are incorporated into our budget projections,” Groff said in a statement.
Follow-up questions regarding details about other settlements were not immediately answered.
The General Assembly for the 2018 fiscal year appropriated $760 million for Medicaid. The program is funded jointly by states and the federal government.
Medicaid provides health insurance nationally to 69 million low-income adults, children, pregnant women, elderly adults and people with disabilities, according to federal statistics.
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Part of a nationwide $465 million settlement, the state Medicaid Fraud Control Unit during the past year worked with the U.S. Department of Justice and other states to reach the Mylan resolution.
The company’s officials agreed to the multimillion-dollar payout after facing allegations that they violated the federal False Claims Act between 2010 and 2017, the U.S. Department of Justice said in a statement.
Enacted in 1863, the False Claims Act targets contractors who defraud the government.
The $899,882 for Delaware was determined after the federal government and a whistleblower each took a cut of the settlement.
The settlement is “1.34 times the total amount of damages,” Kanefsky added.
Some federal and local lawmakers have criticized the settlement, saying investigators should have pressed for higher penalties.
Congress enacted the Medicaid Drug Rebate Program to ensure that states were not susceptible to price gouging by pharmaceutical companies that owned exclusive rights over a drug, according to the U.S. DOJ.
Attorney General Matt Denn said his department will “continue to expand our efforts … to ensure that people do not take advantage of the state’s largest health care program.”
The settlement comes a year after the company was accused of price gauging the EpiPen injectors. The News Journal reported last year about allergy sufferers in Delaware watching helplessly as the price of an EpiPen 2-pack climbed to $600.
The drug maker raised EpiPen prices by roughly 400 percent between 2010 and 2016, according to federal investigators.
Facing backlash, Mylan announced last year it would offer coupons to cover up to $300 “for patients in health plans who face higher out-of-pocket costs.”
In 2009, Mylan officials agreed to a separate settlement with federal investigators over similar Medicaid payments.
During that episode, the company along with Illinois-based UDL Laboratories paid $118 million to states and the Department of Justice for allegedly underpaying Medicaid rebates for several drugs, including Orphenadrine Citrate Aspirin and caffeine tablets.
Contact Karl Baker at kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.