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Attorney General Kilmartin Presents $1.5 Million Check to Executive Office of Health & Human Services for Medicaid Budget

Monies Represent State's Share from Mylan Qui Tam Settlement

Attorney General Peter F. Kilmartin today presented a check for $1,505,081.43 to the Executive Office of Health and Human Services, which represented the state's share of a qui tam settlement previously entered into between the State and Mylan, Inc. and Mylan Specialty, LP.

The settlement was achieved by the Attorney General's Medicaid Fraud and Patient Abuse Unit, working collectively with similar units around the country and with the National Association of Medicaid Fraud Control Units.

The settlement resolved allegations that Mylan knowingly underpaid rebates owed to the Medicaid program for the drugs EpiPen® and EpiPen Jr.® ("EpiPen") dispensed to Medicaid beneficiaries.

"With increasing pressure on the State's Medicaid budget and cost overruns, it is critical that every dollar spent be done so in accordance with all rules and regulations," said Attorney General Kilmartin. "The Medicaid Fraud and Patient Abuse Unit within the Office of Attorney General plays a crucial role in ensuring the recovery of State funds when companies don't play by the rules. I am proud of the work the Unit does on behalf of the State in investigating and holding these companies accountable for their bad practices and recovering monies for the Medicaid program."

Mylan Inc. is a Pennsylvania corporation with its principal place of business in Canonsburg, Pennsylvania. It manufactures, markets and sells pharmaceuticals through its wholly-owned subsidiaries. Mylan Specialty is a Delaware limited partnership with its principal place of business in Morgantown, West Virginia. Mylan Specialty owns the exclusive rights to sell EpiPen in the United States and possesses legal title to the New Drug Codes ("NDCs") for EpiPen.

The Medicaid Drug Rebate Statute was enacted by Congress in 1990 as a cost containment measure for Medicaid's payment for outpatient drugs. That statute requires participating pharmaceutical manufacturers or NDC holders, such as Mylan, to sign a Rebate Agreement with the Secretary of the United States Department of Health and Human Services as a precondition for obtaining Medicaid coverage for their drugs and to pay quarterly rebates to State Medicaid programs for drugs dispensed to Medicaid beneficiaries. NDC holders are required to provide information to CMS concerning their covered drugs. In particular, they have to advise CMS regarding the classification of a covered drug as an "innovator" or "noninnovator" drug, as the amount of rebates owed varies depending on the drug's classification. The amount of the rebate also depends on pricing information provided by the manufacturer. For drugs classified as "innovator" drugs, NDC holders must report their "Best Price," or the lowest price for which it sold a covered drug in a particular quarter.

Specifically, this settlement resolves allegations that from July 29, 2010 to March 31, 2017, Mylan submitted false statements to the Centers for Medicare and Medicaid Services ("CMS") that incorrectly classified EpiPen as a "noninnovator multiple source" drug, as opposed to a "single source" or "innovator multiple source" drug, as those terms are defined in the Rebate Statute and Rebate Agreement. Mylan also did not report a Best Price to CMS for EpiPen, as that term is defined in the Rebate Statute and Agreement, which it was required to do for all "single source" and "innovator multiple source" drugs. As a result, it is alleged Mylan submitted or caused to be submitted false statements to CMS and/or the States relating to EpiPen for Medicaid rebate purposes, and underpaid its EpiPen rebates to the State Medicaid Programs.

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