||In re Mylan N.V. Securities Litigation
||United States District Court for the Western District of Pennsylvania
||Honorable J. Nicholas Ranjan
||Public Employees’ Retirement System of Mississippi (“MPERS”)
||Mylan N.V. (“Mylan” or the “Company”), Heather Bresch, Rajiv Malik, Anthony Mauro, and Kenneth Parks
||February 16, 2016 through May 7, 2019, inclusive
This securities fraud class action stems from Defendants’ promotion of Mylan’s unique ability to manufacture quality drugs across a broad product line while concealing that the Company was experiencing widespread product quality issues at its manufacturing facilities, including at its flagship manufacturing plant in Morgantown, West Virginia.
Mylan is one of the largest drug manufacturers in the world, selling several thousand different drug products. During the Class Period, Mylan developed and manufactured many of these products at its Morgantown plant. The Morgantown plant, as with all drug manufacturing facilities, received inspections by the U.S. Food and Drug Administration (“FDA”) to ensure that its quality and safety testing was complete, consistent, accurate, and free from manipulation. Mylan publicly acknowledged that complying with FDA regulations was critical to its business and profitability.
Yet, despite this acknowledgement, Mylan encountered significant regulatory issues at its manufacturing plants. These issues were largely unknown to the investing public. In 2016, a surprise FDA inspection of Morgantown substantiated a former Mylan employee’s account that, under the direct leadership of President Rajiv Malik, Mylan employees had been manipulating drug test results to achieve passing quality control results, and deliberately corrupting testing data. Following this investigation, Malik attended meetings with the FDA where officials told him they were “stunned” by Mylan’s “egregious” violations. Just two years later, the FDA conducted another surprise investigation into the Morgantown facility. This investigation culminated in the FDA detailing thirteen significant deficiencies in Mylan’s operations and found that, among other violations, Mylan’s attempts to remedy its previous deficiencies identified during the FDA’s 2016 inspection were “inadequate,” and that Mylan exhibited poor quality control oversight, major lapses in equipment cleaning, and ineffective controls.
MPERS filed a 137-page complaint in November 2020 on behalf of a putative class of investors alleging that Mylan and its former executives violated Section 10(b) of the Securities Exchange Act. As alleged, during the Class Period, Mylan’s CEO Heather Bresch and President Malik stressed Mylan’s ability to produce a significant volume of drugs across product lines while “meeting or exceeding” “stringent” quality standards and that this ability differentiated Mylan from competitors. Unbeknownst to investors, however, its manufacturing facilities, including at its flagship Morgantown facility, were rife with systemic, egregious, and long-standing deficiencies. As multiple whistleblowers, Mylan employees, and the FDA told Mylan during the Class Period, the company’s quality failures were a by-product of management’s exclusive focus on production volume so as to increase Mylan’s bottom line. These failures exposed Mylan to serious regulatory penalties, costly production disruptions, and expensive remediation.
At the end of the Class Period, Mylan finally admitted that its focus on generating massive volumes of drugs was unsustainable, and it had to halt production at Morgantown and dramatically reduce Mylan’s generics portfolio going forward. When the relevant truth was finally revealed to investors, Mylan’s stock price declined precipitously, materially damaging investors.
Defendants’ motion to dismiss is pending.