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 ("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)").
I guess it's also worth mentioning that the generic classification "goes back decades, to before Mylan even purchased EpiPen."
Also worth quoting from TFA; "The federal government issued a rule this year requiring all companies with drugs that have been approved under what the Food and Drug Administration calls a new drug application to either reclassify them as brand-name drugs or seek a waiver. Mylan had previously said it would seek such a waiver, but on Friday it said it agreed that the EpiPen would be classified as a branded drug beginning in April of next year."
A quick settlement in this case relieves both parties, as by no means was the government in a good position for accepting the lower rebates for decades and just now turning around and crying fowl.
But by all means, populist outcries are fun to watch, lets waive those pitchforks and yell "off with their heads!"
It's tongue and cheek deterrent, it's effectively ex-communcaiton from their social circles which is where they get their attaboy/girl encouragement that this is acceptable behaviour. They don't see themselves as part of the hoi polloi, and bending the rules to their advantage is called "smart".
Why do you assume that it's the social status of the person that drives this behavior? Why do you assume that people "with money" find this behavior acceptable?
They are more likely to. There is a fairly strong inverse relationship between wealth / money and morality. They are many dubious things that will increase your earnings and franking people less willing to do this stuff tend to make less money and come from famalies that made less money.
For a specific and kind of mind blowing example the inverter of https://en.m.wikipedia.org/wiki/Polymerase_chain_reaction decided not to become a mult-billionaire as he felt starting a company would be worse for humanity and somewhat sketchy.
On the other hand zuckerberg would not have become a billionaire without several amorale choices. I am not saying he is vastly more evil than the average person, but clearly not the kind of guy you want to have any actual power.
Not only that, if I recall correctly they were simultaneously telling another part of the government (the FDA) that the patent made generic substitutes for the Epipen impossible. The argument that the classification "goes back decades" probably doesn't hold much water, since there were generic substitutes for it once upon a time.
You raise an important point, but the record shows that CMS was aware, and asked Mylan to stop doing this[1]. If your error is pointed out and you continue doing it, that's certainly fraud, no?
> CMS "has, on multiple occasions, provided guidance to the industry and Mylan on the proper classification of drugs and has expressly told Mylan that the product is incorrectly classified," Slavitt wrote.
Companies often have disputes with the government about the proper classification of something under a law. Just because the government agency states should an opinion doesn't make that a legally binding resolution of the dispute. Indeed, it's likely this settlement is happening because neither side wants to go to court and risk having the question decided against them.
That's not true at all. People hedge their risk all the time. Do you think that every single person who takes a plea bargain is guilty of the crime they're charged with?
That is a different situation. Mylan says they did nothing wrong, but are transferring $465M anyway. In return, the government will no longer consider the matter in a lawful court.
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.
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.
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.
An incompetent doctor with a script pad is dangerous. Just like an incompetent police officer with a firearm. They should be held to a high level of accountability and I'm not willing to easily dismiss such action as human fallibility as he easily could have deferred his diagnosis to the specialist who was in the same building. It was months before I ended up seeing the specialist who corrected the prescription because I wrongly trusted the original doctors judgement. He made no indication he was just making a guess at what was wrong with me and that I should speak to a specialist as soon as possible.
If they aren't competent enough for their high-stakes job they should be doing something else where their fallibility isn't harming peoples lives. And the inaccurate over-prescribing and was only part of my negative experience with the physician in question.
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)
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).
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.
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.
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.
"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."
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.
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.
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.
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.
Still worth it. Tell me I can rob a bank for $100MM and you meet me upfront - instead of arresting me, just take half of my loot and tell me I can't do another bank for the next 12 months.
Doesn't it depend where Mylan's profit comes from? I don't know the numbers, but ideally the fine would more than cover the amount they made from EpiPens.
In your example, if you legally earned $900MM and then robbed a bank for $100MM, would you be fine if the fine was $500MM when caught?
A more correct analogy, is that if you make $90K/year at your job, you rob a bank for $10K, you are then are fined $55K.
I'm a cynic and most of the time lawsuits penalizing companies are a joke, but this one is better than most.
The problem I have with this is that companies don't make unethical decisions, people do, and the people who made this unethical decision will probably see feel very little of the fine. Maybe they'll get fired, but they'll still walk away with massive amounts of pay and probably a contractually obligated bonus and severance.
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?
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.
Yes, that's the idea, the owners of the company are responsible for the company.
Of course, because Mylan is a corporation, the majority of shareholders have limited liability, their largest loss due to the actions of the company would be their investment.
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.
Adrenaclick and generic versions of it. It's not a direct substitute, it can't be dispensed to fill an Epipen prescription, but it is the same drug, the same dose, and for the same purpose (emergency administration of epinephrine by lightly trained persons).
It's the same purpose, not the same usage. The administration is slightly different, the Adrenaclick injector doesn't have quite as fancy a safety cap and should be held in the thigh for longer.
Lack of education. Doctors write prescriptions for epipen. If they wrote "epinephrine auto-injector" then people could go to Wal-Mart and buy Adrenaclick.
Perhaps the real problem is Adrenaclick isn't running enough TV commercials.
I don't believe the shareholders committed fraud in purchasing shares, they are punished by the actions of criminals outside of their control. Yet is appears the criminals will go free. If you or I committed $100 Million plus in Medicaid fraud, we would most certainly be in prison. Take back the profits from the shareholders, apply civil asset forfeiture proceedings to the executive staffs assets, and put those responsible in prison.
Criminal is a harsh word. It looks like the government just finally balked at Mylan abusing their position. But shareholders had every opportunity to know what the prices were, and what the regulatory climate was. My opinion is that if you invest in pharma, you should know how the market works, or else you might get a haircut. Sure, Mylan aren't on any moral high ground, but the operate the way you would expect a rational firm to act in the regulatory environment lawmakers have set up. Blame your congressperson, your senator.
If the law allows it, don't expect companies not to do it. And if the law doesn't allow it, but the regulators never drop the hammer, don't expect people not to do it. If the regulators do have the funding to do their job, look to the legislature to find the problem. And if you invest in this kind of business know what you're getting involved in.
> And if the law doesn't allow it, but the regulators never drop the hammer, don't expect people not to do it.
I'm not saying it isn't fraud. I'm saying that its par for the course when regulators rarely take action. Mylan got greedy and got slapped. Regulatory bodies in the US are woefully underfunded and this sort of thing is the result. Blame congress.
64% of murders currently result in an conviction. At what percentage would it no longer be the perpetrators responsibility for the crime and instead be the fault of the lawmakers lack of ability to bring him to justice?
Well, if only a handful ever get investigated because the police are understaffed... well then follow the funding. You get the regulatory environment you vote for.
For people talking about throwing executives in jail, see: 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)").