A federal judge in Minnesota has decided that Mylan must face a lawsuit accusing it of paying bribes and kickbacks to pharmacy benefit managers and of conspiring to fix prices on its EpiPen device.
Drug wholesalers Rochester Drug CoOperative and Dakota Drug filed separate but similar lawsuits in March 2020 and June 2020, respectively, claiming that Mylan paid bribes and kickbacks to a group of pharmacy benefit managers (PBMs) —referred to collectively as CVS Caremark, Express Scripts, and OptumRx — to ensure that Mylan could raise the price of its EpiPen auto-injector with impunity while also keeping a monopoly share of the market. The cases were consolidated in August.
Mylan and the PBM defendants filed separate motions to dismiss for failure to state a claim. The PBMs also argued that Rochester Drug and Dakota Drug have not alleged plausible racketeering claims, that the claims are time-barred, and that the claims against the PBMs’ corporate parents should be dismissed. Mylan raised substantially similar arguments about the racketeering claims and added that Rochester Drug and Dakota Drug have not alleged a timely or plausible antitrust monopoly claim.
U.S. District Judge Eric Tostrud largely denied both motions to dismiss.
Rochester Drug and Dakota Drug claim that Mylan’s concerns over new competition from similar devices made by Sanofi and Impax prompted it in 2013 to devise a bribery-and-kickback scheme with the three PBMs, among others.
Rather than try to compete with the newly introduced products by lowering its prices, Mylan began to pay the PBM defendants increased rebates and other fees, and the PBM defendants agreed to maintain EpiPen’s preferred formulary status and to exclude competing products, according to the claim.
The scheme also allegedly led to “aggressive” price increases on the EpiPen, the plaintiffs claim. At the end of 2012, the list price was below $240; by May 2016, it was $609, Tostrud’s order noted. Despite these price increases, Mylan was able to maintain a stable market share because of the EpiPen’s favorable formulary status, the judge added.
Mylan paid more to the PBM defendants, who began keeping more of the increased fees for themselves rather than pass them along to customers, Tostrud wrote.
In its motion to dismiss, Mylan argued that Rochester Drug and Dakota Drug should have filed their racketeering and antitrust claims earlier, but Tostrud wrote that dismissing those claims would be premature at this stage.
Mylan, which Pfizer combined with its Upjohn business to form Viatris in November 2020, declined to comment on Tostrud’s order.