On January 9, 2017, Pomerantz LLP was appointed Co-Lead Counsel in a class action against Mylan N.V. and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 16-cv-08000, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Mylan securities between February 21, 2012 and October 5, 2016 inclusive (the “Class Period”). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.
Mylan, together with its subsidiaries, develops, licenses, manufactures, markets, and distributes generic, branded generic, and specialty pharmaceuticals worldwide. The Company provides generic or branded generic pharmaceutical products in tablet, capsule, injectable, transdermal patch, gel, cream, or ointment forms, as well as active pharmaceutical ingredients. Among other products, Mylan manufactures and sells the EpiPen Auto-Injector (the “EpiPen”), a branded device for injecting a measured dose of epinephrine by means of auto-injector technology to treat severe allergic reactions. Mylan is based in Hertfordshire, the United Kingdom.
Medicaid is a U.S. government insurance program for persons whose income and resources are insufficient to pay for health care. Jointly funded by the state and federal governments, Medicaid is the largest source of funding for medical and health-related services for Americans with low income. Between 2011 and 2015, Medicaid spent approximately $797 million on purchases of EpiPens from Mylan.
The complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Mylan paid Medicaid significantly lower EpiPen rebates than legally required; (ii) Medicaid had previously advised Mylan of the Company’s obligation to pay higher rebates; (iii) Mylan therefore knowingly and systemically overcharged Medicaid for EpiPens in violation of federal law; (iv) millions of dollars of Mylan’s revenue from EpiPen sales were the result of the foregoing illegal conduct by the Company; and (v) as a result of the foregoing, Mylan’s public statements were materially false and misleading at all relevant times.
On September 2, 2016, Inside Health Policy published an article stating that the Centers for Medicare & Medicaid Services (“CMS”), a federal agency whose responsibilities include, inter alia, working in partnership with state governments to administer Medicaid, had “informed Mylan that [the Company] incorrectly classified EpiPen as a generic under the Medicaid rebate program, which caused financial consequences for federal and state governments by reducing the amount of quarterly rebates Mylan owed for its product.”
On this news, Mylan’s share price fell $1.95, or 4.65%, to close at $39.97 on September 2, 2016.
On October 5, 2016, Bloomberg reported that the CMS had issued a letter stating that Mylan had for years overcharged Medicaid to buy the Company’s EpiPen shot, despite being told that the Company needed to provide bigger discounts under the law. The CMS letter stated that from 2011 to 2015, the U.S. Medicaid health program spent approximately $797 million on EpiPens, including rebates of roughly 13%, rather than the discount of 23.1% that the U.S. should have received. The letter stated that the government had previously “expressly told Mylan that the [EpiPen] product is incorrectly classified.”
On this news, Mylan’s share price fell $1.19, or 3.13%, to close at $36.84 on October 6, 2016.
On October 7, 2016, Mylan announced that it had reached a $465 million settlement with the U.S. Department of Justice and other agencies to resolve questions raised about the classification of EpiPen for Medicaid rebate purposes.
On October 7, 2016, Mylan also announced that the Company had “received a document request from the Division of Enforcement at the [SEC] seeking communications with the CMS and documents concerning Mylan products sold and related to the Medicaid Drug Rebate Program, and any related complaints.”