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Mylan will pay $465 million settlement over CMS classification of epipen for Medicaid Drug Rebate Program

Massive settlement with DOJ allows EpiPen maker to avoid admitting wrongdoing in how it has classified the emergency allergy treatment since 2007.

Jeff Lagasse, Associate Editor

Mylan, the pharmaceutical company that has come under fire in recent weeks for hiking the price of its emergency allergy medication injector EpiPen, has agreed to a $465 million settlement with the U.S. Department of Justice. The settlement, according to Mylan, is to "resolve questions" that have been raised about the EpiPen's classification for purposes of the Medicaid Drug Rebate Program.

Under the terms of the settlement, Mylan does not admit to wrongdoing on its part. At issue was whether the EpiPen Auto-Injector -- which now retails for close to $600 for a two-pack -- was properly classified with the Centers for Medicare and Medicaid Services as a "non-innovator drug," and whether it's subject to the formula used to calculate rebates to Medicaid for such drugs.

The EpiPen Auto-Injector had been classified with CMS as a non-innovator drug since before Mylan acquired the product in 2007.

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[Also: Mylan announces half-price generic alternative to EpiPen]

The settlement terms resolve any potential rebate liability claims by federal and state governments as to whether the product should have been classified as an innovator drug for CMS purposes, which would have made it subject to a higher rebate formula. In connection with the settlement, Mylan expects to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services.

Mylan CEO Heather Bresch said in a statement that the agreement is a step in the company's efforts "to move forward and bring resolution to all EpiPen Auto-Injector related matters."

[Also: Hillary Clinton, lawmakers call on Mylan to reverse the price hike on EpiPen]

The EpiPen, which cost $57 in 2007, contains about $1 worth of epinephrine. The injectors are used to quickly treat the severe allergic reaction known as anaphylaxis, which can include swelling of the tongue or throat, shortness of breath and a rash.

In recent weeks, Mylan attempted to reduce the cost through a savings card which will cover up to $300 for the two-pack. For patients who were previously paying the full amount of the company's list price for EpiPen, this effectively reduces their out-of-pocket cost by half. The move was in response to pressure from lawmakers and the public.

[Also: Teva responds to Mylan backlash with planned launch of generic EpiPen]

The company also announced it was launching a half-price generic alternative, and in September, Israeli outfit Teva Pharmaceutical said it would be launching its own generic version of the device by 2018 in the U.S.

Twitter: @JELagasse