Untimely Disclosures Regarding Medicaid Misclassification Costs Mylan N.V. $30 Million

On September 27, 2019, Mylan N.V. agreed to pay the SEC $30 million to settle charges brought against the Company for failing to timely disclose a loss contingency arising from a Department of Justice’s investigation into Mylan’s misclassification of its most profitable product, EpiPen, which resulted in hundreds of millions of dollars in overcharges to Medicaid. 

According to the SEC, Mylan was informed that it was misclassifying the EpiPen as generic and that a DOJ investigation would commence in late 2014.  When the DOJ informed Mylan that it would sue unless an adequate settlement could be reached, Mylan conducted at least two separate analyses of the potential damages.  Nevertheless, Mylan failed to disclose:  (1) that Medicaid had taken an adverse position to Mylan’s classification of EpiPen in late 2014; and (2) the potential loss contingency or even an accrual for the estimated loss despite having sufficient information to make those determinations as early as the second quarter of 2016.  As a result, the SEC contended that Mylan’s public filings were false and/or misleading. 

Here is a link to the SEC Press Release.