Mylan N.V., the pharmaceutical giant whose pricing policies related to its market-leading EpiPen product has been called “price-gouging” by consumer advocates as well as making the company a target in numerous lawsuits, is once again headed to court. This time, however, Mylan faces the prospect of being ordered to pay what could be one of the largest civil settlements in American corporate history.
Mylan’s EpiPen is a preloaded syringe of epinephrine that is used to treat life-threatening allergic reactions. Mylan, which purchased the rights to manufacture and distribute the product in 2007, has been severely criticized for raising the price of EpiPens from $100 to more than $600 per two-pack unit.
The EpiPen Lawsuit
The EpiPen lawsuit, filed by three plaintiffs on April 3rd in a federal district court sitting in Tacoma, Washington, alleges that Mylan conspired with the nation’s largest Pharmacy Benefit Managers (PBMs) to dominate the market for emergency, self-administered, epinephrine injection devices. PBMs play an important role in the price of drugs by acting as intermediaries between health insurers and drug manufacturers. But more significantly, the newest EpiPen lawsuit asks the court to certify the lawsuit as a class action and asks to proceed under the provisions of the “civil” version of the Racketeer Influenced and Corrupt Organizations (RICO) Act.
Under federal civil procedure, if the plaintiffs can demonstrate to the court that many others have been harmed by the same actions of a defendant the court may certify the original EpiPen lawsuit as a class action lawsuit and allow the original plaintiffs to “stand in” as representatives of all other members of the injured “class.” Damage awards in class action lawsuits tend to be much larger than those in individual lawsuits.
Mylan is no stranger to class action lawsuit, having become embroiled in at least a dozen such lawsuits over the years. The threat to Mylan in the most recent lawsuit is the fact that it was filed as both a class action and as a civil RICO lawsuit.
In a Civil (non-criminal) RICO lawsuit, if the plaintiffs can prove a defendant engaged in a pattern of behavior that led to the defendant gaining an unfair trade advantage or to an unjust enrichment by way of manipulating a free and open market, the court may triple any damages awarded to a plaintiff as well as impose sanctions that are meant to prevent the resumption of the same behavior in the future. Although there have been cases where an organization has been the subject of both criminal and civil RICO actions, the lawsuit against Mylan is purely a civil action and makes no accusation of criminal activity on the part of Mylan.
The prospect of having to defend against the combination of a class action lawsuit and a civil RICO action is surely unnerving to Mylan’s in-house corporate counsel as well as any outside firms that the company might retain. In fact, and according to how the court manages the conduct of the pending trial, the combination of a class action and a civil RICO lawsuit could well place Mylan in an “unwinnable” position of successfully defending against one aspect of the plaintiffs’ case only to have that defense turned against them later in the case.
To summarize, Mylan continues to be forced to explain its pricing and marketing tactics related to its EpiPen product. If a recently filed class action and RICO lawsuit is successful, it could prove to be fiscally burdensome to both Mylan and the Pharmacy Benefit Managers that have worked with Mylan in the past.
Learn more about Medical Device Lawsuits.