Pharmaceutical maker Mylan (MYL) is the target of yet another set of questions on its pricing practices. This time, though, its controversial autoinjector EpiPen was spared headlines.
Bloomberg and Wall Street Journal reported Thursday that the Department of Justice is investigating several generic drug makers on allegations of pricing collusion, which sent the group's stocks plummeting. The DOJ's investigation has been under way for at least two years and a number of companies have reported receiving subpoenas related to the investigation.
Mylan had previously disclosed its subpoena on antibiotic doxycycline in filings for quite some time. While other companies are being investigated about blood pressure drug digoxin, Mylan has not disclosed any subpoenas on this drug in its filings.
"Mylan is and has always been committed to cooperating with the Antitrust Division's investigation," Mylan spokeswoman Nina Devlin wrote via email. "To date, we know of no evidence that Mylan participated in price fixing."
Evercore analysts estimate the liabilities for Mylan will be between $3 million and $700 million. The highest fine ever paid under the Sherman Act for this type of problem was $500 million, Evercore analyst Umer Raffat said during an investor call Friday.
According to Raffat, investigators will have to focus on one question as they look at the approximately 24 companies involved in this investigation.
"Is it conscious parallelism or price fixing?" Raffat asked. In other words, are drug prices rising at the same time because of economic principles, or because the drugmakers are working together behind the scenes?
Mylan's stock dropped more than 7% to $34.10 in Thursday's trading. The share price bounced back Friday, rising about $1 per share or 3%, hitting $35.23 Friday morning.
This isn't the first time Mylan has come under fire for dubious pricing practices.
The Consumer Union and several U.S. senators questioned whether Mylan engaged in a "pay for delay" scheme, in which it may have paid Teva Pharmaceuticals (TEVA) to delay the launch of a competitor to Mylan's EpiPen back in September.
Consumer Union sent a letter to the Federal Trade Commission on Sept. 7 urging the agency to launch a federal review of Mylan's actions, which it called anti-competitive. The investigation, if launched, would be similar to the one announced by the New York Attorney General that same week.
Along with the Consumers Union, Senators Amy Klobuchar (D-Minn.) and Richard Blumenthal, (D-Conn.) on Sept. 6 sent a letter to the FTC, urging it to review Mylan's practices.
This was after the company had come under public scrutiny for the way it priced its lead drug, EpiPen. The autoinjector, which is used when patients have anaphylaxis or severe allergic reactions, saw price jumps of approximately 25% each year. The drug industry average is 10%.
These price leaps caused patients to see a price tag of up to $600 for a two-pack, as insurers had started passing more of the costs of EpiPens and other drugs onto Mylan.
The FTC is not currently investigating Mylan for its pricing practices surrounding EpiPen, but if it were to come under investigation, Mylan could be forced to pay hefty fines.
Companies were once allowed to delay the entry of competitive drugs to the market through the Wax-Hatchman Act. In 2013, the Supreme Court closed loopholes in the law that allowed companies to engage in this practice.
In 2012, Mylan and Teva reached a settlement over a patent dispute over Teva's generic version of EpiPen, although there was no indication from either company that Mylan had paid Teva to delay the drug. Whether or not it received payment, Teva agreed to keep a generic off the market until mid-2015.
Teva is also under investigation for generic pricing collusion, and is cooperating with the current subpoena.
Teva's shares fell 9% Thursday, before bouncing back slightly Friday, hitting $35.30 per share, up 3.4% from market's open.