Mylan's (MYL) Deeply Flawed Legal And PR Move

Robert Coury, the CEO of Mylan (MYL), his general counsel, and public affairs staff don’t know how to quit when they are ahead.

The company objected to a story in the Pittsburgh Post-Gazette that raised questions about quality and regulatory problems at the firm’s Mylan’s Morgantown, W.Va., plant.  After a lengthy investigation, Mylan announced that “the final FDA report closes the inspection with no deficiencies found and no FDA “483” issues.

The headline on the press release announcing the FDA decision reads “Mylan Pharmaceuticals Receives Final FDA Report and Reaffirms Its 48-Year Exemplary Record of Quality.” Did the FDA reaffirm Mylan’s 48-year record? Probably not. At least there is not evidence of that in the release itself.

Mylan has decided to sue the newspaper. The company’s statement about the suit said “The articles mischaracterized a minor deviation from an internal Mylan procedure, creating the false appearance of significant quality and regulatory issues at Mylan’s Morgantown, W.Va., plant when no such issues existed. The U.S. Food and Drug Administration (FDA) recently concluded a review at the facility and determined that there were no deficiencies and that no action was required.” There was no mention of the FDA’s opinion on Mylan’s 48-year track record in that either.

Mylan went on to say “The lawsuit seeks, among other things, the return of the internal confidential and proprietary documents in the Post-Gazette’s possession that were improperly obtained without Mylan’s knowledge or consent.” And, “In addition to recovery of its internal documents, Mylan also seeks to recover compensatory, exemplary and other appropriate relief from the named defendants and any others, as yet unknown, who were involved in or possibly benefited from the wrongful conduct.”

Between the beginning of the investigation and the suit against the paper, Mylan produced extraordinary financial results. Total revenues for the quarter ended June 30, 2009, increased by $63.9 million, or 5.3%, to $1.27 billion, from $1.20 billion in the same prior year period. The company also upped guidance.

Mylan should have quit while it was ahead. It has almost certainly proved that the newspaper was wrong. Bringing up the FDA 48-year juxtaposition of words implies something that the company did not demonstrate in the release. That puts Mylan back into a position where it has to justify a gratuitous statement.

Doulgas A. McIntyre