Mylan, the beleaguered maker of the EpiPen, is facing more public backlash after the New York attorney general announced an investigation into the company's contracts with schools.
Eric Schneiderman announced Tuesday that his office is investigating Mylan over “potentially anticompetitive terms” in its sales contracts with school systems in New York. Such terms were discovered in a preliminary review by the attorney general's office, according to a release.
Mylan distributes EpiPens free of charge to over 65,000 schools throughout the country. In a statement Tuesday, Mylan acknowledged that it had previously put a “limited purchase restriction” on schools that wanted to purchase more than the free supply they were allotted, but it no longer exists.
“There are no purchase requirements for participation in the program, nor have there ever been to receive free EpiPen Auto-Injectors,” Mylan said. “Previously, schools who wished to purchase EpiPen Auto-Injectors beyond those (that) 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.”
The statement also said the program “continues to adhere to all applicable laws and regulations.” A spokeswoman didn't respond when asked what that restriction entailed, but STAT reported last month that Mylan's previous agreement required that schools agree to “not in the next twelve (12) months purchase any products that are competitive to EpiPen(R) Auto-Injectors.”
A Mylan spokesperson told STAT last month that the requirement had been dropped but didn't specify when.
At the federal level, Mylan has officially pushed against competitor Teva Pharmaceutical Industries' application to the Food and Drug Administration for approval of its generic EpiPen. It filed a series of "citizen petitions" against Teva, which are known to slow the approval process down.
In his announcement Friday prior to Mylan's response, Schneiderman pledged the “full resources of my office to this critical investigation.”
“No child's life should be put at risk because a parent, school, or healthcare provider cannot afford a simple, life-saving device because of a drug-maker's anti-competitive practices,” Schneiderman said. “If Mylan engaged in anti-competitive business practices, or violated antitrust laws with the intent and effect of limiting lower cost competition, we will hold them accountable.”
Many members of Congress have called for a federal investigation into Mylan's business practices, including its pricing strategy.
Mylan's inclusion of these terms in school contracts could be considered by state authorities to be exclusionary conduct and in violation of antitrust laws, said Michael Carrier, a Rutgers University law professor who has written about Mylan's efforts to halt FDA approval for Teva's generic EpiPen. He said Mylan can be viewed as monopolistic because of its significant market share in the epinephrine auto-injector market, believed to be close to 90%.
“The concern with those sort of arrangements is that they can restrict competition,” Carrier said. “In particular they can make it very difficult for rivals of the EpiPen to get a foothold in schools.”
Carrier said it appears Mylan has tried to cross the boundaries of antitrust laws, as many companies do when they're worried about competitors entering the market. He said it's possible other state attorney generals will launch their own investigations, especially because such an investigation is likely to be perceived positively by constituents.
“My guess is that Mylan today is under a lot more scrutiny and is going to look at agreements like this a lot more carefully,” Carrier said.