Mylan (MYL) To Pay $30M To Settle SEC Charges For EpiPen
Zacks Investment Research | Sep 30, 2019 05:45AM ET
Shares of generic maker Mylan N.V. (NASDAQ:MYL) were down 2.4% after U.S. Securities and Exchange Commission (SEC) announced charges against the company in connection with its EpiPen product probe.
The SEC charged Mylan for accounting and disclosure failures relating to a Department of Justice (DOJ) probe into whether the company overcharged Medicaid by hundreds of millions of dollars for its largest product, EpiPen. The SEC stated that investors were kept in the dark about EpiPen misclassification and the potential loss the company faced as a result of the pending investigation into the misclassification.
Consequently, Mylan has agreed to pay $30 million as charges for the same.
Per SEC’s complaint, the company misclassified EpiPen as a "generic" drug under the Medicaid Drug Rebate Program. This led Mylan to pay much lower rebates to the government than what it would have paid if EpiPen had been classified as a "branded" drug. The complaint also states that the Centers for Medicare and Medicaid Services (CMS) informed Mylan in October 2014 about this misclassification.
Thereafter, the DOJ conducted a civil investigation into whether the company misclassified EpiPen and thereby overcharged the government for the drug’s sales to Medicaid patients. The investigation started in November 2014 and continued for nearly two years. During the investigation, DOJ issued multiple subpoenas and investigative demands, rejected Mylan’s arguments to close the investigation, and indicated its intent to sue the company if it failed to make a settlement offer.
Moreover, the complaint alleges that Mylan produced documents and other information to DOJ, including potential damage calculations and offers for settlement. The allegations of misclassification and resultant charges further add to Mylan’s woes.
The stock has lost 29.6% year to date compared with the industry ’s decline of 7.2%.
Earlier, there were allegations against Mylan and rival Teva Pharmaceuticals (NYSE:TEVA) for inflating the prices of generic drugs. Both companies were also accused of obstructing a probe on the same by a few lawmakers.
The going has been tough lately for Mylan. It had previously undertaken a strategic review of its business due to challenging business conditions in North America and pricing pressures. Along with the quarterly results, Mylan announced a merger agreement with Upjohn, Pfizer's (NYSE:PFE) off-patent branded and generic established medicines business (including Lipitor, Celebrex and Viagra), to create a new global pharmaceutical company. The decision to merge with Upjohn comes as a result of this review.
Get The News You Want
Zacks Rank and a Stock to Consider
Mylan currently carries a Zacks Rank#3 (Hold).
A better-ranked stock in the same space is Dr. Reddy's Laboratories Ltd (NYSE:RDY) with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Dr. Reddy's earnings estimates have moved up by 37 cents to $2.06 for 2019 over the past 90 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.