Mylan hit with new class action lawsuit over EpiPen pricing

(Reuters) - Mylan NV MYL.O has been hit with a new proposed class action lawsuit over the price of its EpiPen allergy treatment, which shot up to more than $600 for a two-pack of the device from less than $100 in 2007.

FILE PHOTO - EpiPen auto-injection epinephrine pens manufactured by Mylan NV pharmaceutical company for use by severe allergy sufferers are seen in Washington, U.S. August 24, 2016. REUTERS/Jim Bourg/File Photo

The lawsuit was filed on Monday in Tacoma, Washington, federal court by three EpiPen purchasers. It claims Mylan engaged in a scheme with pharmacy benefit managers, or PBMs - companies that act as intermediaries between pharmacies, insurers and drug companies - to dominate the market and overcharge consumers.

Although other lawsuits have been filed over EpiPen pricing, Monday’s is the first to focus on the role of PBMs and to bring claims under the Racketeer Influenced and Corrupt Organizations Act, a federal law historically used against organized crime.

Mylan spokeswoman Nina Devlin declined to comment.

The EpiPen, acquired by Mylan in 2007, is a hand-held device that treats life-threatening allergic reactions by automatically injecting a dose of epinephrine. The company now sells a $300 generic version.

The plaintiffs in Monday’s lawsuit say Mylan paid large rebates to PBMs so they would favor EpiPen over competitors. In helping Mylan control 95 percent of the epinephrine auto-injector market, the rebates artificially inflated EpiPen’s sticker price, resulting in higher costs for many patients, the suit said.

The lawsuit says the three largest U.S. pharmacy benefits managers - CVS Caremark, part of CVS Health CVS.N; Express Scripts Holding Co ESRX.O and OptumRX, part of UnitedHealth Group Inc UNH.N - aided Mylan's alleged scheme. They were not named as defendants.

The plaintiffs are seeking damages to represent a nationwide class of EpiPen purchasers.

Mylan has grappled with a growing backlash from U.S. consumers over the price of EpiPen in the last year. Other class action lawsuits have been filed against Mylan over the pricing of EpiPen, including two currently consolidated in Kansas federal court. However, they have not focused on the role of PBMs.

The company is also under investigation by the Federal Trade Commission and said last September that it had agreed to a $465 million settlement with the U.S. Justice Department over how the drug was classified for government buyers. The Justice Department has not confirmed the settlement.

Mylan Chief Executive Officer Heather Bresch has said that the company makes only about $100 per EpiPen pack, and that most consumers pay less than $50 for a two-pack.

The plaintiffs in Monday’s lawsuit said Bresch falsely tried to paint Mylan as a “victim” of a flawed healthcare system and avoid its own responsibility in setting rebates.

The case is Rainey et al v. Mylan Specialty LP, U.S. District Court, Western District of Washington, No. 17-cv-05244.

Reporting by Brendan Pierson in New York; Editing by Dan Grebler