Risk & Compliance

Mylan Settles Charges With SEC

Regulators said the pharmaceutical company failed to make disclosures around the DOJ’s investigation of its EpiPen.
Lauren MuskettSeptember 27, 2019
Mylan Settles Charges With SEC

Pharmaceutical company Mylan has agreed to pay $30 million to settle charges from the Securities and Exchange Commission over accounting and disclosure failures relating to its EpiPen.

According to the SEC’s complaint, Mylan classified the EpiPen, its largest revenue and profit-generating product, as a “generic” drug under the Medicaid Drug Rebate Program, resulting in its paying much lower rebates to the government than if EpiPen had been classified as a “branded” drug.

In 2016, Mylan announced a $465 million settlement with the Department of Justice over the claims it had overcharged the government, but the SEC said Mylan failed to disclose the loss contingency from the investigation or record an accrual for the estimated loss. “As a result, Mylan’s public filings were false and misleading,” the SEC said.

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Regulators also said the company made misleading risk-factor disclosures in 2014 and 2015 after it was informed that the EpiPen was misclassified.

Mylan did not admit or deny the charges.

“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 investigations 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.”

“Mylan believes at this time, taking all other matters into consideration, that this settlement is the right course of action for the Company,” Mylan said in a statement.

Mylan acquired the device, which treats life-threatening allergic reactions, in 2007. It came under criticism after raising the price of the drug to $600 from $100 the previous year. The company later released its own generic version of the device for $300 amid public backlash.