Drug company Mylan has finalized a $30 million settlement with the Securities and Exchange Commission for alleged accounting and disclosure failures surrounding its popular EpiPen.
Mylan had disclosed in a regulatory filing in July it had reached a $30 million agreement-in-principle with the SEC to settle the allegations. As stated then, Mylan neither admitted nor denied the SEC’s claims.
In August 2017, Mylan and Mylan Specialty reached a $465 million settlement with the Department of Justice to resolve allegations that they violated the False Claims Act by knowingly misclassifying EpiPen as a generic drug to avoid paying rebates owed primarily to Medicaid. According to the Department of Justice, between 2010 and 2016, Mylan increased the price of the EpiPen by approximately 400 percent and yet paid only a fixed 13 percent rebate to Medicaid during the same period.
The SEC’s complaint piggybacked off the DOJ’s enforcement, stating Mylan “failed to disclose or accrue for the loss relating to the DOJ investigation before October 2016.” As a result, the company’s public filings were false and misleading, as were its risk factor disclosures.
“As alleged in our complaint, investors were kept in the dark about Mylan’s EpiPen misclassification and the potential loss Mylan faced as a result of the pending investigation into the misclassification,” said Antonia Chion, associate director in the SEC’s Division of Enforcement. “It is critical that public companies accurately disclose material business risks and timely disclose and account for loss contingencies that can materially affect their bottom line.”
The SEC specifically charged Mylan with violating Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder.