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Mylan to Settle EpiPen Overpricing Case for $465M
- cmdrfred 10y agoCorrection: EpiPen Maker Mylan's Shareholders Will Pay $465M to Settle Medicaid Overcharging Case
- ch4s3 10y agoIn a roundabout sort of way. And if you make that assumption, you would have to agree that the shareholders benefited from monopoly pricing for years prior. Any serious investor in pharma is well aware of the risk of the regulatory hammer.
- forrestthewoods 10y agoIt's not a monopoly. There have been and continue to be other epinephrine auto-injectors from competitors.
- ch4s3 10y agoHave been, but what else is on the market right now in the US? Why is that? Its not for lack of demand.
- Animats 10y agoHere's pricing info in the UK.[1] (Via a proxy site, because HM Government doesn't like access to their pricing data from outside the UK.) EpiPen® Auto-injector 0.3 mg (delivering a single dose of adrenaline 300 micrograms), adrenaline 1 mg/mL (1 in 1000), net price: 2-mL auto-injector device = £26.45 2 × 2-mL auto-injector device = £52.90 This is the same product from the same vendor as in the US. [1] https://www.justproxy.co.uk/index.php?q=aHR0cDovL3d3dy5ldmlkZW5jZS5uaHMudWsvZm9ybXVsYXJ5L2JuZi9jdXJyZW50LzMtcmVzcGlyYXRvcnktc3lzdGVtLzM0LWFudGloaXN0YW1pbmVzLWh5cG9zZW5zaXRpc2F0aW9uLWFuZC1hbGxlcmdpYy1lbWVyZ2VuY2llcy8zNDMtYWxsZXJnaWMtZW1lcmdlbmNpZXMvYW5hcGh5bGF4aXMvYWRyZW5hbGluZWVwaW5lcGhyaW5lL2ludHJhbXVzY3VsYXItaW5qZWN0aW9uLWZvci1zZWxmLWFkbWluaXN0cmF0aW9uL2VwaXBlbg%3D%3D&hl=2ed https://www.justproxy.co.uk/index.php?q=aHR0cDovL3d3dy5ldmlk...
- chrismcb 10y agoThe Fda approval favors mylan, making it difficult for others to compete
- deleted 10y ago[deleted]
- forrestthewoods 10y agoWhat does that mean? FDA has approved equivalent products.
- maxerickson 10y agoAdrenaclick and generic versions of it. It's not a direct substitute, it can't be dispensed to fill an Epipen prescription, but it is the same drug, the same dose, and for the same purpose (emergency administration of epinephrine by lightly trained persons). http://www.goodrx.com/adrenaclick http://www.goodrx.com/adrenaclick
- angersock 10y agoIf it is the same drug, dose, and usage I must profess a bit of confusion as to what could possibly be preventing it from being a direct substitute.
- maxerickson 10y agoIt's the same purpose, not the same usage. The administration is slightly different, the Adrenaclick injector doesn't have quite as fancy a safety cap and should be held in the thigh for longer. https://www.epipen.com/about-epipen/how-to-use-epipen https://www.epipen.com/about-epipen/how-to-use-epipen http://adrenaclick.com/how_to_use_adrenaclick_epinephrine_injection_USP_auto_injector.php http://adrenaclick.com/how_to_use_adrenaclick_epinephrine_in... I think there is a legitimate concern about the usage being different, but I'm not sure it should prevent it from being substituted.
- forrestthewoods 10y agoLack of education. Doctors write prescriptions for epipen. If they wrote "epinephrine auto-injector" then people could go to Wal-Mart and buy Adrenaclick. Perhaps the real problem is Adrenaclick isn't running enough TV commercials.
- BurningFrog 10y agoMany have tried to launch competing products, but the FDA had denied all but AdrenaClick. Thorough explanation and editorilizing here: http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-drugs-vs-chairs/ http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-dr...
- chrisbennet 10y agohttp://m.imgur.com/gallery/th6Ua http://m.imgur.com/gallery/th6Ua http://www.epinephrineautoinject.com/ http://www.epinephrineautoinject.com/
- cmdrfred 10y agoI don't believe the shareholders committed fraud in purchasing shares, they are punished by the actions of criminals outside of their control. Yet is appears the criminals will go free. If you or I committed $100 Million plus in Medicaid fraud, we would most certainly be in prison. Take back the profits from the shareholders, apply civil asset forfeiture proceedings to the executive staffs assets, and put those responsible in prison.
- ch4s3 10y agoCriminal is a harsh word. It looks like the government just finally balked at Mylan abusing their position. But shareholders had every opportunity to know what the prices were, and what the regulatory climate was. My opinion is that if you invest in pharma, you should know how the market works, or else you might get a haircut. Sure, Mylan aren't on any moral high ground, but the operate the way you would expect a rational firm to act in the regulatory environment lawmakers have set up. Blame your congressperson, your senator. If the law allows it, don't expect companies not to do it. And if the law doesn't allow it, but the regulators never drop the hammer, don't expect people not to do it. If the regulators do have the funding to do their job, look to the legislature to find the problem. And if you invest in this kind of business know what you're getting involved in.
- cmdrfred 10y ago>If the law allows it, don't expect companies not to do it. This is outright fraud. The law does not allow it. They purposefully misrepresented their product for financial gain.
- ch4s3 10y ago> And if the law doesn't allow it, but the regulators never drop the hammer, don't expect people not to do it. I'm not saying it isn't fraud. I'm saying that its par for the course when regulators rarely take action. Mylan got greedy and got slapped. Regulatory bodies in the US are woefully underfunded and this sort of thing is the result. Blame congress.
- maxerickson 10y agoYes, that's the idea, the owners of the company are responsible for the company. Of course, because Mylan is a corporation, the majority of shareholders have limited liability, their largest loss due to the actions of the company would be their investment.
- DannyBee 10y ago"because Mylan is a corporation" You say this as if this was always true. LLC's are a very recent invention. In the past, shareholders and owners of the company were, in fact, liable.
- morninj 10y agoLLCs are newish. U.S. corporations have had limited liability for well over a century.
- GFK_of_xmaspast 10y agoSeems fair, they were the ones who profited from the overcharging.
- advisedwang 10y agoSo if $1.3B was spent and the rebate was short by 10% then Mylan should have paid $130M more. That indicates somewhere around $365M is essentially punitive. (Or, if $1.3B was net of the 13% already paid, the gross was $1.49B, the underpayment was $149M and the punitive cost $316M)
- makomk 10y agoThat's only the minimum rebate for non-generic drugs. Companies have to pay more if the prices increase by more than inflation (Epipens did) or if they offer bigger discounts to others (may have done, I'm not sure).
- refurb 10y agoCorrect. The Medicaid discount comes off of the average manufacturer price (AMP) which includes most of discounts offered to customers. In other words if my list price is $1, but on average I sell it for $0.80, the the Medicaid price is $0.80 minus the Medicaid discount. However, I assume that they were only paying the wrong discount and that otherwise the calculation included AMP and the price increase penalty. Makes me wonder if there was a penalty applied as well.
- mankash666 10y agoSatisfying, to say the least. Unlike a $5 million slap on the wrist.
- gcr 10y agoBut how many fractions of a percent of their revenue does this really represent?
- harryh 10y agoI'm not sure about revenue, but it represents about 55% of their annual profits. 465M / (EPS of 1.57 * 534.91M shares) = .5537
- huac 10y agoFor 1 year.
- joering2 10y agoStill worth it. Tell me I can rob a bank for $100MM and you meet me upfront - instead of arresting me, just take half of my loot and tell me I can't do another bank for the next 12 months.
- Forlien 10y agoDoesn't it depend where Mylan's profit comes from? I don't know the numbers, but ideally the fine would more than cover the amount they made from EpiPens. In your example, if you legally earned $900MM and then robbed a bank for $100MM, would you be fine if the fine was $500MM when caught?
- joering2 10y agoYes. As long as I don't get the hard time and can continue future robbery attempts, I'm fine with that, given I will get caught in the first place. Unless the idea is that Epi will all of sudden become affordable like it used to be.
- rayiner 10y agoFor people using the word "fraud." Fraud requires some misrepresentation of a material fact. Nobody at CMS was unaware of what an Epipen was, depending on Mylan's representations about what was in there. This is a fight over whether Mylan should have checked Box A or Box B. There is a reasonable case to be made for both sides. After all, the drug in an Epipen (epinephrine) is generic. For people talking about throwing executives in jail, see: http://caselaw.findlaw.com/us-11th-circuit/1249868.html http://caselaw.findlaw.com/us-11th-circuit/1249868.html ("In a case where the truth or falsity of a statement centers on an interpretive question of law, the government bears the burden of proving beyond a reasonable doubt that the defendant's statement is not true under a reasonable interpretation of the law. United States v. Migliaccio, 34 F.3d 1517, 1525 (10th Cir.1994) (holding that the government bears the burden to negate any reasonable interpretations that would make the defendant's statement correct)").
- xorgar831 10y agoI'd like to see the execs barred from country clubs, and a 2yr ban on playing golf.
- navbaker 10y agoWhat would this accomplish?
- xorgar831 10y agoIt's tongue and cheek deterrent, it's effectively ex-communcaiton from their social circles which is where they get their attaboy/girl encouragement that this is acceptable behaviour. They don't see themselves as part of the hoi polloi, and bending the rules to their advantage is called "smart".
- chris_wot 10y agoIsn't there something in the U.S. Constitution about prohibiting cruel and unusual punishment? It's an unusual idea, and frankly it's cruel on the rest of us that we would have to share the same space as these people.
- M_Grey 10y agoAll of the privileges, none of the responsibilities. Bad damned news.
- sriram_sun 10y agoSo from an accounting perspective is the Government just one more highly paid executive?
- alkjshdkfjasdf 10y agono.
- a_imho 10y ago"A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one."
- dmix 10y agoAnother year another major pharmaceutical settlement: https://en.wikipedia.org/wiki/List_of_largest_pharmaceutical_settlements?wprov=sfla1 https://en.wikipedia.org/wiki/List_of_largest_pharmaceutical... It's like a game of musical chairs for who gets to pay the government a billion dollars this year. This Epipen case sounds far less bad then most on that list. Especially if we're going to talk about punishment. As most of the other settlements on the list were for mislabeled drugs. People were spending money and wasted weeks/months of their supposed treatment on drugs that didn't help them. I personally experienced the effects of this due to a bad doctor, not mislabeling, and I was seriously sick for a much longer period of time then I should have been. Fortunately I found a specialist who knew what he was talking about and told me to take one drug which cost $100/m instead of three others costing me $900/m (I didn't have drug benefits insurance at the time). For me the wasted time on a treatment that didn't work was far more harmful to me than the added cost.
- alkjshdkfjasdf 10y agoI am sorry for your experience with diagnosis in regards to your health, but your last paragraph or two is completely unrelated to anything other than "diagnosis is hard / my physician wasn't able to help". In other words, it is completely unrelated, and your overcharging on drugs was awful and again, completely unrelated to this core issue.
- dmix 10y agoI was simply relating to the severity of mislabeling. The last comment I made about the price was merely to support the need for greater punishment of mislabeling (added cost is a side effect of mislabeling). Not to draw comparison to my added expenditure and EpiPen over-pricing. I wasn't over-charged for drugs, I was over-prescribed by the doctor - and this shows the danger of being given drugs you're not supposed to have (both wasted money and loss of treatment time). Which was the point of the last two paragraphs in support of my claim that mislabeling is worse than pharma companies over-charging insurance companies (I believe non-insurance holders were offered lower prices by Mylan?). But I could see how my choice of phrasing might have been misinterpreted.
- 10y ago
- chris_wot 10y agoWow, only half the reported loss of Donald Trump! They got off lightly.
- mtgx 10y agoAnd this will solve absolutely nothing. Change the system if you want real change. Allow competitors on the market to diminish Mylan's stranglehold on it.
- tracker1 10y agoThat's the nature of patents.. what is needed is a compulsory license schedule for prescription medications and devices as well as a dual-source requirement for gov't paid prescriptions.
- dmix 10y agoCan you expand on this or point me towards a longer explanation? I've been curious for a long time now on how this issue could be solved.
- afarrell 10y agoSlatestarcodex has a reasonably good examination of the system-level issues that led to the whole story: http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-drugs-vs-chairs/ http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-dr...
- dbg31415 10y agoBut... they don't have to lower the price back to what it was? So... how is this anything more than the government getting a taste of the spoils fleeced from gouging people who need medical care? I fail to see what good this does, seems to just incentivize the company to make back another $465M by raising the price again soon as the media hype is over.
- pilom 10y agoDifferent issues. Issue 1, Epipens cost $300 now instead of $50. Issue 2, Mylan was saying they were generics and getting $261 from the government when in reality, they were brand name and the government should have only been paying $231. This settlement is about issue 2 and they have said they will correct this practice, issue 1 is unrelated.
- stevefeinstein 10y agoIs the penalty more than they profited from the bad thing? (No according to the back of the envelope calculation I just did) Why are they paying the money to the government, rather than refunding those who were harmed by the bad thing. This just amounts to a tax on the people who bought the pens which will just go to the government funds. The penalty may cause the company to change their behavior, but they still managed to profit from the bad behavior. And those that were overcharged are still damaged by having overpaid. There really needs to be some common sense applied. The penalty must exceed the profit. Those who are damaged must be made whole, or as close to whole as they can reasonably be made. Anything less is an insult on the public's intelligence.
- icebraining 10y agoWhy are they paying the money to the government, rather than refunding those who were harmed by the bad thing. This just amounts to a tax on the people who bought the pens which will just go to the government funds. They are being accused of overcharging Medicaid and Medicare, ie, the government.