
Mylan to Settle EpiPen Overpricing Case for $465M - helloworld
http://www.nytimes.com/2016/10/08/business/epipen-mylan-justice-department-settlement.html
======
rayiner
For people using the word "fraud." Fraud requires some misrepresentation of a
material fact. Nobody at CMS was unaware of what an Epipen was, depending on
Mylan's representations about what was in there. This is a fight over whether
Mylan should have checked Box A or Box B. There is a reasonable case to be
made for both sides. After all, the drug in an Epipen (epinephrine) _is_
generic.

For people talking about throwing executives in jail, see:
[http://caselaw.findlaw.com/us-11th-
circuit/1249868.html](http://caselaw.findlaw.com/us-11th-circuit/1249868.html)
("In a case where the truth or falsity of a statement centers on an
interpretive question of law, the government bears the burden of proving
beyond a reasonable doubt that the defendant's statement is not true under a
reasonable interpretation of the law. United States v. Migliaccio, 34 F.3d
1517, 1525 (10th Cir.1994) (holding that the government bears the burden to
negate any reasonable interpretations that would make the defendant's
statement correct)").

~~~
specialist
Let's just tax wind fall profits and be done with it. Anything over 30%
triggers a cashectomy.

If a company or person can't figure out how to spend their ill-gotten or
lottery winning gains, the government will be happy to help.

Keep the money moving.

~~~
icebraining
The fix for that already exists:
[https://en.wikipedia.org/wiki/Hollywood_accounting](https://en.wikipedia.org/wiki/Hollywood_accounting)

~~~
specialist
I'm now curious how "Hollywood" rules square with GAAT.

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dmix
Another year another major pharmaceutical settlement:
[https://en.wikipedia.org/wiki/List_of_largest_pharmaceutical...](https://en.wikipedia.org/wiki/List_of_largest_pharmaceutical_settlements?wprov=sfla1)

It's like a game of musical chairs for who gets to pay the government a
billion dollars this year.

This Epipen case sounds far less bad then most on that list. Especially if
we're going to talk about punishment. As most of the other settlements on the
list were for mislabeled drugs. People were spending money and wasted
weeks/months of their supposed treatment on drugs that didn't help them.

I personally experienced the effects of this due to a bad doctor, not
mislabeling, and I was seriously sick for a much longer period of time then I
should have been. Fortunately I found a specialist who knew what he was
talking about and told me to take one drug which cost $100/m instead of three
others costing me $900/m (I didn't have drug benefits insurance at the time).
For me the wasted time on a treatment that didn't work was far more harmful to
me than the added cost.

~~~
alkjshdkfjasdf
I am sorry for your experience with diagnosis in regards to your health, but
your last paragraph or two is completely unrelated to anything other than
"diagnosis is hard / my physician wasn't able to help".

In other words, it is completely unrelated, and your overcharging on drugs was
awful and again, completely unrelated to this core issue.

~~~
dmix
I was simply relating to the severity of mislabeling. The last comment I made
about the price was merely to support the need for greater punishment of
mislabeling (added cost is a side effect of mislabeling). _Not_ to draw
comparison to my added expenditure and EpiPen over-pricing.

I wasn't over-charged for drugs, I was over-prescribed by the doctor - and
this shows the danger of being given drugs you're not supposed to have (both
wasted money and loss of treatment time). Which was the point of the last two
paragraphs in support of my claim that mislabeling is worse than pharma
companies over-charging insurance companies (I believe non-insurance holders
were offered lower prices by Mylan?). But I could see how my choice of
phrasing might have been misinterpreted.

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advisedwang
So if $1.3B was spent and the rebate was short by 10% then Mylan should have
paid $130M more. That indicates somewhere around $365M is essentially
punitive.

(Or, if $1.3B was net of the 13% already paid, the gross was $1.49B, the
underpayment was $149M and the punitive cost $316M)

~~~
makomk
That's only the minimum rebate for non-generic drugs. Companies have to pay
more if the prices increase by more than inflation (Epipens did) or if they
offer bigger discounts to others (may have done, I'm not sure).

~~~
refurb
Correct. The Medicaid discount comes off of the average manufacturer price
(AMP) which includes most of discounts offered to customers. In other words if
my list price is $1, but on average I sell it for $0.80, the the Medicaid
price is $0.80 minus the Medicaid discount.

However, I assume that they were only paying the wrong discount and that
otherwise the calculation included AMP and the price increase penalty. Makes
me wonder if there was a penalty applied as well.

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afarrell
Slatestarcodex has a reasonably good examination of the system-level issues
that led to the whole story: [http://slatestarcodex.com/2016/08/29/reverse-
voxsplaining-dr...](http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-
drugs-vs-chairs/)

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dbg31415
But... they don't have to lower the price back to what it was?

So... how is this anything more than the government getting a taste of the
spoils fleeced from gouging people who need medical care?

I fail to see what good this does, seems to just incentivize the company to
make back another $465M by raising the price again soon as the media hype is
over.

~~~
pilom
Different issues. Issue 1, Epipens cost $300 now instead of $50. Issue 2,
Mylan was saying they were generics and getting $261 from the government when
in reality, they were brand name and the government should have only been
paying $231. This settlement is about issue 2 and they have said they will
correct this practice, issue 1 is unrelated.

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sriram_sun
So from an accounting perspective is the Government just one more highly paid
executive?

~~~
a_imho
"A new car built by my company leaves somewhere traveling at 60 mph. The rear
differential locks up. The car crashes and burns with everyone trapped inside.
Now, should we initiate a recall? Take the number of vehicles in the field, A,
multiply by the probable rate of failure, B, multiply by the average out-of-
court settlement, C. A times B times C equals X. If X is less than the cost of
a recall, we don't do one."

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mtgx
And this will solve absolutely nothing. Change the system if you want _real_
change. Allow competitors on the market to diminish Mylan's stranglehold on
it.

~~~
tracker1
That's the nature of patents.. what is needed is a compulsory license schedule
for prescription medications and devices as well as a dual-source requirement
for gov't paid prescriptions.

~~~
dmix
Can you expand on this or point me towards a longer explanation? I've been
curious for a long time now on how this issue could be solved.

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stevefeinstein
Is the penalty more than they profited from the bad thing? (No according to
the back of the envelope calculation I just did)

Why are they paying the money to the government, rather than refunding those
who were harmed by the bad thing.

This just amounts to a tax on the people who bought the pens which will just
go to the government funds. The penalty may cause the company to change their
behavior, but they still managed to profit from the bad behavior. And those
that were overcharged are still damaged by having overpaid.

There really needs to be some common sense applied. The penalty must exceed
the profit. Those who are damaged must be made whole, or as close to whole as
they can reasonably be made. Anything less is an insult on the public's
intelligence.

~~~
icebraining
_Why are they paying the money to the government, rather than refunding those
who were harmed by the bad thing. This just amounts to a tax on the people who
bought the pens which will just go to the government funds._

They are being accused of overcharging _Medicaid and Medicare_ , ie, the
government.

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M_Grey
All of the privileges, none of the responsibilities. Bad damned news.

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mankash666
Satisfying, to say the least. Unlike a $5 million slap on the wrist.

~~~
gcr
But how many fractions of a percent of their revenue does this really
represent?

~~~
forgetsusername
Would you rather they were crushed, and all the employees that had nothing to
do with this (of which there are tens of thousands) were harshly affected?

~~~
imagist
I would rather we put the people who made this decision in jail. People make
unethical decisions, not companies, and fining a company doesn't usually
punish those people in any significant way.

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cmdrfred
Correction: EpiPen Maker Mylan's Shareholders Will Pay $465M to Settle
Medicaid Overcharging Case

~~~
ch4s3
In a roundabout sort of way. And if you make that assumption, you would have
to agree that the shareholders benefited from monopoly pricing for years
prior. Any serious investor in pharma is well aware of the risk of the
regulatory hammer.

~~~
forrestthewoods
It's not a monopoly. There have been and continue to be other epinephrine
auto-injectors from competitors.

~~~
ch4s3
Have been, but what else is on the market right now in the US? Why is that?
Its not for lack of demand.

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chrismcb
The Fda approval favors mylan, making it difficult for others to compete

~~~
forrestthewoods
What does that mean? FDA has approved equivalent products.

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chris_wot
Wow, only half the reported loss of Donald Trump! They got off lightly.

