Mylan is facing yet another lawsuit over its EpiPen price increases. This time it’s a proposed class action suit that alleges the company violated the Racketeer Influenced and Corrupt Organizations Act, better known as RICO, by colluding with the nation’s three largest pharmacy benefit managers (PBMs) to restrict market competition and drive up the price of the epinephrine auto-injector.
A law firm representing three plaintiffs filed the suit in a Tacoma, Wash., federal court last week and is seeking class action status. Mylan is accused in the lawsuit of offering large rebates to CVS Caremark, Express Scripts and UnitedHealth Group’s OptumRx in exchange for preferential consideration. The PBMs are not named as defendants.
Mylan is embroiled in multiple drug pricing-related lawsuits, not all of which are specific to EpiPen, as well as an antitrust investigation by the Federal Trade Commission. In addition, last October the company said it had agreed to a $465 million settlement regarding charges by the federal government that alleged the company had misclassified EpiPen as a non-innovator drug, rather than a brand-name drug, and had therefore underpaid Medicaid rebates. The Department of Justice, however, has not publicly confirmed any such settlement.
Mylan’s CEO, Heather Bresch, told legislators last September that after rebates, fees and discounts the company makes about $100 on each EpiPen two-pack—which has a list price of more than $600—and that most consumers pay less than $50 for the product.
Christina Kollmeyer, one of the plaintiffs in the latest lawsuit, is paying substantially more than $50. Under her high-deductible insurance plan, last year she was paying $313.38 for an EpiPen two-pack for her son. As of the start of this year, her out-of-pocket cost is $735.09. EpiPens have a one-year expiration period.
Mylan launched a generic version of EpiPen in December, which sells for $300 per two-pack.
Our Take: Racketeering? RICO? Really?
It’s been two weeks since another lawsuit related to PBMs and pharma pricing was announced, which we wrote about here. Again, we can’t underestimate the importance of this to pharma—and to PBMs.
As we’ve written, PBMs make more profits when pharmaceutical prices increase, because the rebates they earn is based on a percentage of list price. It is easy to see how a drug company would be encouraged to raise its list prices to curry favor with PBMs, either for access or preferential pricing.
It would be premature to say that we see a trend with these lawsuits, but what comes out of them could be an on-ramp to price regulations. No one wants to hear that.
Unless you’re Ms. Kollmeyer.