On Friday, Mylan, the maker of EpiPen, announced that it had reached a $465 million settlement with the US Department of Justice for overcharging the government for the life-saving drug. Mylan will not admit to wrongdoing.
The settlement came faster than most, and the news sent Mylan’s stock soaring. But there was actually more bad news that came with it.
If you just read the Mylan’s statement, and not the document it filed with the SEC, you missed that the SEC has opened its own investigation into the company for the exact same issue.
Also on October 7, 2016, Mylan received a document request from the Division of Enforcement at the Securities and Exchange Commission (“SEC”) seeking communications with the CMS [Centers for Medicare and Medicaid Services] and documents concerning Mylan products sold and related to the Medicaid Drug Rebate Program, and any related complaints. Mylan intends to fully cooperate with the SEC’s investigation.
The information in Items 2.02 and 7.01 (including Exhibit 99.1) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
In other words, this $465 million fine is just the beginning of the matter. And of course, the matter is just one among Mylan’s many problems. The company came under fire in August after it raised the price of a 2-pack of EpiPen to $608. A pack cost around $100 when Mylan bought the drug in 2007.
That’s why officials all over Washington are looking into the matter.
“It’s hard to say with a straight face that you did nothing wrong when your company has to repay nearly half a billion dollars,” Representative Elijah Cummings (D-MD) said in a statement following the announcement of the settlement. “With investigations now being initiated by Congress and others, this may be the beginning of Mylan’s problems–not the end. Our constituents are still paying far more than they should be for this critical medication.”
Cummings was instrumental in getting Mylan CEO Heather Bresch down to Washington to testify before the House last month. He’s also requested more documents from the company since then.
So you might want to wait a little before you think the coast is clear.