Mylan to Settle EpiPen Overpricing Case for $465M • Hacker News Board

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#71

Post by stevefeinstein » Sat, Oct 08, 2016, 5:07 PM UTC

Is the penalty more than they profited from the bad thing? (No according to the back of the envelope calculation I just did)

Why are they paying the money to the government, rather than refunding those who were harmed by the bad thing.

This just amounts to a tax on the people who bought the pens which will just go to the government funds. The penalty may cause the company to change their behavior, but they still managed to profit from the bad behavior. And those that were overcharged are still damaged by having overpaid.

There really needs to be some common sense applied. The penalty must exceed the profit. Those who are damaged must be made whole, or as close to whole as they can reasonably be made. Anything less is an insult on the public's intelligence.

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#72

Post by stevefeinstein » Sat, Oct 08, 2016, 5:10 PM UTC

forgetsusername wrote: post #51

gcr wrote: post #14

Earlier quoted context omitted.

But how many fractions of a percent of their revenue does this really represent?

Would you rather they were crushed, and all the employees that had nothing to do with this (of which there are tens of thousands) were harshly affected?

Yes.

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#73

Post by wrong_variable » Sat, Oct 08, 2016, 5:32 PM UTC

specialist wrote: post #69

rayiner wrote: post #15

For people using the word "fraud." Fraud requires some misrepresentation of a material fact. Nobody at CMS was unaware of what an Epipen was, depending on Mylan's representations about what was in there. This is a fight over whether Mylan should have checked Box A or Box B. There is a reasonable case to be made for both sides. After all, the drug in an Epipen (epinephrine) is generic. For people talking about throwin…

Let's just tax wind fall profits and be done with it. Anything over 30% triggers a cashectomy. If a company or person can't figure out how to spend their ill-gotten or lottery winning gains, the government will be happy to help. Keep the money moving.

There are a lot of ways large companies can get around towards the 30% figure.

- Stock Buyback

- Foreign Acquisition, sending the money to a offshore company that a company on paper can make look like its doing some "research".

- Over funding pension schemes and use that money later on to fund investment.

These are just a few examples but companies can do a lot of different things to make it look like the money is moving.

The important things is both the movement and making sure ownership also changes hand from the original investors.

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#74

Post by refurb » Sat, Oct 08, 2016, 5:51 PM UTC

makomk wrote: post #55

advisedwang wrote: post #4

So if $1.3B was spent and the rebate was short by 10% then Mylan should have paid $130M more. That indicates somewhere around $365M is essentially punitive. (Or, if $1.3B was net of the 13% already paid, the gross was $1.49B, the underpayment was $149M and the punitive cost $316M)

That's only the minimum rebate for non-generic drugs. Companies have to pay more if the prices increase by more than inflation (Epipens did) or if they offer bigger discounts to others (may have done, I'm not sure).

Correct. The Medicaid discount comes off of the average manufacturer price (AMP) which includes most of discounts offered to customers. In other words if my list price is $1, but on average I sell it for $0.80, the the Medicaid price is $0.80 minus the Medicaid discount.

However, I assume that they were only paying the wrong discount and that otherwise the calculation included AMP and the price increase penalty. Makes me wonder if there was a penalty applied as well.

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#75

Post by icebraining » Sat, Oct 08, 2016, 6:01 PM UTC

specialist wrote: post #69

rayiner wrote: post #15

For people using the word "fraud." Fraud requires some misrepresentation of a material fact. Nobody at CMS was unaware of what an Epipen was, depending on Mylan's representations about what was in there. This is a fight over whether Mylan should have checked Box A or Box B. There is a reasonable case to be made for both sides. After all, the drug in an Epipen (epinephrine) is generic. For people talking about throwin…

Let's just tax wind fall profits and be done with it. Anything over 30% triggers a cashectomy. If a company or person can't figure out how to spend their ill-gotten or lottery winning gains, the government will be happy to help. Keep the money moving.

The fix for that already exists: https://en.wikipedia.org/wiki/Hollywood_accounting

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#76

Post by rayiner » Sat, Oct 08, 2016, 6:03 PM UTC

specialist wrote: post #69

rayiner wrote: post #15

For people using the word "fraud." Fraud requires some misrepresentation of a material fact. Nobody at CMS was unaware of what an Epipen was, depending on Mylan's representations about what was in there. This is a fight over whether Mylan should have checked Box A or Box B. There is a reasonable case to be made for both sides. After all, the drug in an Epipen (epinephrine) is generic. For people talking about throwin…

Let's just tax wind fall profits and be done with it. Anything over 30% triggers a cashectomy. If a company or person can't figure out how to spend their ill-gotten or lottery winning gains, the government will be happy to help. Keep the money moving.

Mylan's quarterly profit margin is 15-20%. 30%+ is Apple territory.

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#77

Post by imagist » Sat, Oct 08, 2016, 6:47 PM UTC

joering2 wrote: post #36

harryh wrote: post #20

Earlier quoted context omitted.

I'm not sure about revenue, but it represents about 55% of their annual profits. 465M / (EPS of 1.57 * 534.91M shares) = .5537

Still worth it. Tell me I can rob a bank for $100MM and you meet me upfront - instead of arresting me, just take half of my loot and tell me I can't do another bank for the next 12 months.

That's simply not a correct analogy.

A more correct analogy, is that if you make $90K/year at your job, you rob a bank for $10K, you are then are fined $55K.

I'm a cynic and most of the time lawsuits penalizing companies are a joke, but this one is better than most.

The problem I have with this is that companies don't make unethical decisions, people do, and the people who made this unethical decision will probably see feel very little of the fine. Maybe they'll get fired, but they'll still walk away with massive amounts of pay and probably a contractually obligated bonus and severance.

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#78

Post by imagist » Sat, Oct 08, 2016, 6:49 PM UTC

forgetsusername wrote: post #51

gcr wrote: post #14

Earlier quoted context omitted.

But how many fractions of a percent of their revenue does this really represent?

Would you rather they were crushed, and all the employees that had nothing to do with this (of which there are tens of thousands) were harshly affected?

I would rather we put the people who made this decision in jail. People make unethical decisions, not companies, and fining a company doesn't usually punish those people in any significant way.

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#79

Post by specialist » Sat, Oct 08, 2016, 7:39 PM UTC

icebraining wrote: post #75

specialist wrote: post #69

Earlier quoted context omitted.

Let's just tax wind fall profits and be done with it. Anything over 30% triggers a cashectomy. If a company or person can't figure out how to spend their ill-gotten or lottery winning gains, the government will be happy to help. Keep the money moving.

The fix for that already exists: https://en.wikipedia.org/wiki/Hollywood_accounting

I'm now curious how "Hollywood" rules square with GAAT.

Re: Mylan to Settle EpiPen Overpricing Case for $465M

#80

Post by icebraining » Sat, Oct 08, 2016, 8:03 PM UTC

stevefeinstein wrote: post #71

Is the penalty more than they profited from the bad thing? (No according to the back of the envelope calculation I just did) Why are they paying the money to the government, rather than refunding those who were harmed by the bad thing. This just amounts to a tax on the people who bought the pens which will just go to the government funds. The penalty may cause the company to change their behavior, but they still mana…

Why are they paying the money to the government, rather than refunding those who were harmed by the bad thing. This just amounts to a tax on the people who bought the pens which will just go to the government funds.

They are being accused of overcharging Medicaid and Medicare, ie, the government.