ST. GEORGE — Utah has received its $1.6 million share of a settlement with Mylan, maker of the EpiPen, which agreed to pay $465 million to settle allegations it overbilled Medicaid for its emergency allergy injectors for a decade.
The agreement was finalized in August.
Utah Attorney General Sean Reyes confirmed receipt of the payment in a statement issued Friday, saying that the proceeds represent recovery for the state and federal government for expenditures to the Utah Medicaid program.
“The pharmaceutical industry produces many vital drugs and products for the benefit of our citizens, but like any other major industry, there need to be safeguards in place and rigorous enforcement of the law to assure that the taxpayers are being treated fairly under the regulations established by Congress,” Reyes said.
Mylan NV, technically based in England but with operational headquarters near Pittsburgh, became a poster child for pharmaceutical industry greed for hiking the list price of EpiPens repeatedly.
It raised the price per pair from $94 in 2007 to $608 last year. Experts estimate it costs less than $10 to produce one EpiPen, which patients inject in the thigh to stop a runaway allergic reaction to foods such as nuts and eggs or insect bites and stings.
In August, the U.S. Department of Justice disclosed that its EpiPen case began when a competitor, Sanofi-Aventis US LLC, filed a lawsuit against Mylan under the False Claims Act.
The law allows individuals and companies to sue on behalf of the government over improper charges to government programs and to receive a share of any money recovered. Sanofi is gettin $38.7 million. The federal government and all 50 states split the bulk of the settlement.
EpiPens have long dominated the market and continue to do so, between their name recognition and deals Mylan has made to get preferable or exclusive coverage from insurers and prescription benefit managers.
According to the Justice Department, Mylan paid Medicaid, the joint federal-state health program for the poor and disabled, too-low rebates for EpiPens by improperly classifying the brand-name product as a generic. Drugmakers are required to pay Medicaid rebates of 13 percent for generic products it purchases, versus a 23.1 percent rebate for brand-name drugs, which cost far more.
EpiPen has been incorrectly classified since late 1997 as a generic product under Medicaid. Mylan acquired rights to EpiPen in 2007 and didn’t change its classification.
In addition, Mylan wasn’t paying Medicaid a second rebate required whenever a brand-name drug’s price rises more than inflation, which averaged less than 2 percent a year from 2007 through 2016.
Critics of the settlement, including U.S. Sen. Chuck Grassley, R-Iowa, said that the Health and Human Services Department’s Office of Inspector General’s investigated and concluded that Medicaid programs paid Mylan $1.27 billion more than they should have between 2006 and 2016.
Mylan was one of four companies that in October 2009 settled charges they didn’t pay appropriate rebates to state Medicaid programs for multiple medicines. The companies paid back a combined $124 million.
The Medicaid Fraud Control Unit and the Utah Department of Health worked with the National Association of Medicaid Fraud Control Units team that participated in the settlement negotiations with Mylan on behalf of the states, according to the state Attorney General’s Office.
“Mylan captured the attention of congressional and local leaders of their price increases of the drug EpiPen which is still a matter for review, but this settlement resolves a separate matter concerning the classification of the same drug for purposes of paying governments the correct rebate amount,” Utah Assistant Attorney General Robert Steed said.
The Associated Press contributed to this story.