It looks like Mylan NV may finally be out of hot water from that EpiPen price hike controversy. The company has just settled with the US Justice Department for $465 million settlement, after, of course, a brow beating and reprimand from Congress.
On news of Friday’s settlement, Mylan shares rallied, on Monday. The settlement also helps to resolve Medicaid claims that the company had significantly overcharged the government health program for the allergy-intervention injection. And this helped to reverse some of the stock’s massive [26 percent] decline since only August.
Of course, that is when lawmakers began to ask about the immense sixfold price increase since 2007, asking if the company did, in fact, ripped off the government, too.
Of course, the price of the shot still has not changed.
But just because share prices were restored—making investors happy in the process—lawmakers are still concerned.
For example, Connecticut Senator Richard Blumenthal (D) called for a Mylan investigation. He says, “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.”
In light of the controversy—and as a result of the investigation—Mylan CEO Heather Bresch has had to endure quite the intense hearing from the House Committee on Oversight and Government Reform. At the hearing, lawmakers, of course, questioned not just the price hike but also her personal honesty and ethics.
In the settlement, the Justice Department specifies Bresch has still not admitted to any wrongdoing, but that the company will “continue to work with the government to finalize the settlement.”
As such, Leerink Partners analyst Jason Gerberry notes, “EpiPen can now fade off into sunset, removing a major headache for management,” calling this settlement—and the guidance cut to follow—just a small price for the company to pay. He adds, “The settlement likely gets the U.S. government out of Mylan’s hair.”
But just because Mylan may have skated by on this, they will still have to face a few obstacles. For example, Wells Fargo & Co analyst David Maris notes, “Investors will like the settlement as many will think this puts the issue largely behind the company — we disagree. It does nothing to answer the original issue — EpiPen pricing and consumers.”