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Mylan's EpiPen School Sales Trigger N.Y. Antitrust Probe

Sept. 6, 2016
New York Attorney General Eric Schneiderman said on Tuesday that a preliminary probe showed Mylan may have added anti-competitive terms to sales contracts with the schools.

New York state’s top cop opened an antitrust investigation into Mylan NV, saying the embattled drugmaker may have ripped off local school systems that purchased life-saving EpiPen shots for students.

New York Attorney General Eric Schneiderman said on Tuesday that a preliminary probe showed Mylan may have added anticompetitive terms to sales contracts with the schools. It’s the latest fallout for the company after a 500 percent price hike triggered outrage by lawmakers and the public.

“No child’s life should be put at risk because a parent, school or health-care provider cannot afford a simple, life-saving device because of a drug-maker’s anticompetitive practices,” Schneiderman said in a statement Tuesday.

The investigation will be broad, and a key focus will be whether Mylan locked schools into non-competitive contracts in order to purchase the EpiPens at an affordable price, according to a person familiar with the matter who asked not to be identified because the details aren’t public.

EpiPen, a self-administered injection of epinephrine used to treat allergic reactions from bee stings, food allergies or other triggers, cost $57 a shot when Mylan purchased the drug in 2007. Now, almost a decade later, the price of two auto-injector EpiPens is more than $600, according to prescription drug price tracker GoodRx.

Price Scrutiny

The EpiPen price increases drew particular attention in Washington because Chief Executive Officer Heather Bresch, the daughter of Democratic Senator Joe Manchin of West Virginia, successfully pushed legislation to encourage use of the product in schools nationwide.

Mylan had spent about $4 million in 2012 and 2013 on lobbying for EpiPens, including on the 2013 School Access to Emergency Epinephrine Act, according to lobbying disclosure forms filed with the Office of the Clerk for the House of Representatives.

Mylan, based in Canonsburg, Pennsylvania, said in a statement on Tuesday that the company’s EpiPen4Schools program doesn’t have any purchase requirements for participation.

“Previously, schools who wished to purchase EpiPen Auto-Injectors -- beyond those they were eligible to receive free under the program -- could elect to do so at a certain discount level with a limited purchase restriction, but such restriction no longer remains,” according to Mylan’s statement.

Drawing Scrutiny

Mylan is the latest in a string of pharmaceutical companies to draw scrutiny over steep price increases, with drug executive Martin Shkreli and representatives from Valeant Pharmaceuticals International Inc. called before Congress this year. Hillary Clinton weighed in earlier this month when she outlined a set of proposals to crack down on “unjustified” increases on prices for older treatments.

Responding to outrage on raised prices for the EpiPen, Mylan announced that it would introduce a generic version for $300, while continuing to sell the branded product. The move was blasted by members of Congress who called it a public-relations maneuver.

“If Mylan engaged in anticompetitive business practices, or violated antitrust laws with the intent and effect of limiting lower-cost competition, we will hold them accountable,” Schneiderman said in his statement.

The probe isn’t the first sign of alarm in New York over the EpiPen controversy. On Sept. 1, the New York City official in charge of protecting the city’s pension funds for teachers, firefighters, police and city employees asked Mylan in a letter to name an independent chairman. New York City Comptroller Scott Stringer said the situation was a result of "gross mismanagement" by Mylan and an example of the board’s failure to oversee risk. Mylan responded by saying it already has 10 independent directors. The city’s pension funds own 1.1 million Mylan shares valued at about $45 million.

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