Mylan Pharmaceuticals, the manufacturer of the popular EpiPen, was recently hit with a securities class action lawsuit alleging that it made false or misleading statements and failed to make a number of disclosures. To learn more this case, visit Battea’s Mylan Pharmaceuticals case summary.
Specifically, the suit alleges that the company was improperly listing EpiPen as a generic drug under the Medicaid Drug Rebate Program and therefore reduced the number of rebates Mylan owed. As a result, Mylan paid rebates of 13 percent for a period of four years from 2011 to 2015, when it should have been paying 23.1 percent, which cost the federal government about $100 million. Further, the suit alleges that Mylan didn’t have effective controls on its financial reporting, causing a number of public statements it made to be false or misleading. The suit has a class period from Feb. 28, 2013, to Oct. 7, 2016.
The drug manufacturer Mylan is facing a securities class action.The impact of the listing
The securities class action comes in the wake of Mylan’s third-quarter financial reporting, which showed the company suffered a net loss of $119.8 million in the three-month period. In the same quarter a year earlier, it had net earnings of $428.6 million, and Mylan said this loss stemmed from a massive settlement with the U.S. Department of Justice and other agencies related to its listing of EpiPen as a generic drug. In all, the settlement cost the company some $465 million. The company admitted no wrongdoing in settling the case.
Meanwhile, Mylan also reported that it will soon roll out a generic version of the EpiPen, as has been planned for a while, and that this coming launch hurt its sales numbers with wholesalers in the third quarter. However, prescriptions for the non-generic EpiPen were up on a quarterly basis.
As a result of these issues, Mylan lowered its projected per-share profits to between $4.70 and $4.90 from the previous $4.85 to $5.15.
“This agreement is another important step in Mylan’s efforts to move forward and bring resolution to all EpiPen Auto-Injector related matters,” said Mylan CEO Heather Bresch in announcing the settlement with DOJ in early October. “The agreement is in addition to the significant steps Mylan has taken in relation to EpiPen Auto-Injector over the past several weeks, including the unprecedented, pending launch of a generic version of EpiPen Auto-Injector and expansion of our patient access programs for this product. Entering into this settlement is the right course of action at this time for the Company, its stakeholders and the Medicaid program.”
The affect on stock prices
As a result of all these issues, Mylan’s stock has taken a significant tumble from where it stood earlier in the year. After spending much of 2016 in the high $40 range, and occasionally surpassing $50 per share, Mylan now sits at just $36.47. On Oct. 7, when the settlement was announced, the stock was at just $35.94, but the quick resolution of the case prompted a minor surge. Even the brief recovery has it well below its year-to-date high of $54.09 set back in January.
For more information on this case or other class action litigations, please contact Kevin Doyle, Senior Vice President, at 203-987-4949 or info@battea.com.