Lost in Mylan’s Monday blockbuster announcement of the planned merger with Upjohn were a few tiny references to a recent $30 million settlement with the SEC over a 2016 SEC investigation.
Reuters first reported the news of the settlement on Wednesday morning. Mylan gives its fullest explanation of the settlement – related to SEC’s probe of EpiPen price hikes – on page 59 of its 10-Q quarterly report, filed Monday.
SEC’s Enforcement Division first contacted Mylan in October 2016 seeking documents and communications with the Centers for Medicare and Medicaid Services regarding Mylan’s apparent misclassification of the EpiPen as a non-innovator multiple source drug (NIMS) for the Medicaid Drug Rebate Program.
The NIMS designation allowed it to rebate Medicaid at 13 percent instead of the higher minimum 23.1 percent of non-innovator (branded and authorized generics issued by the brand-name maker) drugs.
That November, SEC sent a second letter, seeking information on and public disclosures regarding Mylan’s previously disclosed $465 million settlement with the Department of Justice over the misclassification and resulting underpayments to Medicaid.
SEC then served Mylan subpoenas and additional requests for information. Mylan noted in the 10-Q that it “has been cooperating fully with the SEC staff’s investigation.”
Mylan and the SEC reached an agreement-in-principle in July. Under the settlement, Mylan would neither admit nor deny SEC allegations that it violated two subsections of the Securities Act of 1933 and the reporting, books and records, and internal controls provisions of the Securities Exchange Act of 1934.
They negotiated a civil penalty of $30 million.
On page 74 of the same form, Mylan notes that its second quarter litigation settlements, including the SEC settlement, totaled $45.7 million, with an offsetting $24.8 million gain for resolution of a patent infringement case regarding Mylan’s generic version of Advair and Seretide, for a net expense of $20.9 million.
On a separate 8-K notice to investors issued on the same day, Mylan noted that also during the second quarter it recorded a gain of about $32.7 million for a fair value adjustment related to the generic Advair/Seletide respiratory delivery platform contingent consideration.
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