Shares of EpiPen maker Mylan NV (NASDAQ: MYL) rose nearly 12.5% early Monday following the company’s announcement after markets closed Friday that it had reached an agreement with the U.S. Department of Justice to pay $465 million to resolve questions about the classification of it EpiPen auto-injector products for purposes of the Medicaid drug rebate program.
The company has reduced its full fiscal year 2016 adjusted earnings per share (EPS) guidance from a prior range of $4.85 to $5.15 to a new range of $4.70 to $4.90. Mylan attributed the majority of the change to “previously announced changes in EpiPen Auto-Injector access programs and the upcoming launch of the generic to EpiPen Auto-Injector.”
Mylan also said the settlement terms “provide for resolution of all potential rebate liability claims by federal and state governments as to whether the product should have been classified as an innovator drug for [Centers for Medicaid and Medicare Services] CMS purposes and subject to a higher rebate formula.”
CEO Heather Bresch said:
This agreement is another important step in Mylan’s efforts to move forward and bring resolution to all EpiPen Auto-Injector related matters. 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.
Bresch’s statement came after intense grillings in from of both houses of Congress, and has not been greeted warmly by some lawmakers. Bloomberg New reported that Connecticut Democratic Senator Richard Blumenthal said:
This settlement is a shadow of what it should be — lacking real accountability for Mylan’s apparent lawbreaking. The deal short circuits investigation and fact finding necessary to determine the scope of illegality, culpability of individuals, and proof of criminal wrongdoing.
Mylan stock traded up about 9% in the mid-afternoon at $39.18 in a 52-week range of $35.58 to $55.51. The low was posted last Friday. The stock’s consensus 12-month price target is $55.41.