Mylan NV (NASDAQ:MYL) was a big riser in pre-market trade after the drugs giant revealed on Friday it had reached a settlement with the government.
The drugs maker has agreed to pay US$465mln in return for the US government dropping charges against it. The drugs firm had been accused of over-charging government agencies for its EpiPen Auto-Injector emergency allergy treatment.
From 2007, when Mylan acquired the product, it raised the price of life-saving EpiPen six-fold to more than US$600 for a packet of two, causing outrage among those who were dependent on the self-administered product.
Without admitting any wrong-doing, Mylan settled with the US Department of Justice.
“The question in the underlying matter was whether EpiPen Auto-Injector was properly classified with the Centers for Medicaid and Medicare Services (CMS) as a non-innovator drug under the applicable definition in the Medicaid Rebate statute and subject to the formula that is used to calculate rebates to Medicaid for such drugs,” Mylan’s statement said on Friday.
“EpiPen Auto-Injector has been classified with CMS as a non-innovator drug since before Mylan acquired the product in 2007 based on long-standing written guidance from the federal government," it noted.
News of the settlement coincided with Mylam lowering its earnings guidance for the year. The company now expects full year earnings per share to be somewhere in the range of US4.70 to US$4.90, versus previous guidance of US$4.85 to US$5.15.
The company attributed the downgrade largely to the previously announced changes in the EpiPen Auto-Injector Medicaid programs, and the upcoming launch of the (considerably cheaper) generic version of the injector.
Having drawn a line under an affair that reflected very badly on the company, Mylan’s shares shot up 11.5% to US$35.94, helped by broker Raymond James upgrading the stock to ‘strong buy’.