By Nate Raymond
BOSTON (Reuters) – Mylan NV <MYL.O> has finalized a $465 million settlement resolving U.S. Justice Department claims it overcharged the government for its EpiPen emergency allergy treatment, which became the center of a firestorm over price increases.
The U.S. Attorney’s Office in Massachusetts on Thursday announced the accord, which was soon after criticized by some congressional members as being too easy on the drugmaker. It came 10 months after Mylan said it had reached a deal.
The settlement resolved claims that Mylan avoided higher rebates to state Medicaid programs by misclassifying EpiPen as a generic product, even though it was marketed and priced as a brand-name product.
“Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules,” Acting U.S. Attorney William Weinreb said in a statement.
Under the deal, Mylan did not admit wrongdoing. It will reclassify EpiPen and pay the rebate applicable to its new classification as of April 1, 2017.
“Bringing closure to this matter is the right course of action for Mylan and our stakeholders to allow us to move forward,” Mylan Chief Executive Heather Bresch said in a statement.
The deal followed a False Claims Act whistleblower lawsuit filed by French rival Sanofi SA <SASY.PA> in 2016, two years after it first raised the matter with authorities, Weinreb’s office said.
Sanofi, which formerly marketed a rival product called Auvi-Q, will receive nearly $38.8 million as a reward from the government.
Sanofi in a statement called pursuing the matter “the right thing to do.” It has a separate antitrust lawsuit pending alleging Mylan engaged in illegal conduct to squelch competition to EpiPen.
Mylan shares rose 2.10 percent to $31.11 on the Nasdaq.
The EpiPen, which Mylan acquired in 2007, is a handheld device that treats life-threatening allergic reactions by automatically injecting a dose of epinephrine.
Mylan came under fire last year after raising the price of a pair of EpiPens to $600, from $100 in 2008, enraging consumers and putting it in the center of the ongoing U.S. debate over the high cost of prescription medicines.
Mylan has since offered its own generic version for about $300. The company announced it had reached a Justice Department settlement in October.
Some congressional members previously criticized the $465-million settlement as too small. U.S. Senator Richard Blumenthal, a Democrat from Connecticut, renewed that position on Thursday, calling it “completely insufficient.”
A U.S. Department of Health and Human Services’ Office of Inspector General analysis released in May found the U.S. government may have overpaid for EpiPens by up to $1.27 billion between 2006 and 2016.
“Absolving Mylan from a finding of wrongdoing has cleared the way for the company to pocket the money it embezzled from an American public in desperate need of lifesaving and affordable medications,” Blumenthal said in a statement.
Republican Senator Chuck Grassley of Iowa in a statement called the accord a “disappointment,” saying it “looks like the settlement amount short-changes the taxpayers.”
Mylan shares were up 0.1 at $30.50 in late trading.
(Reporting by Nate Raymond in Boston; Editing by Nick Zieminski)