The Agenda Behind Mylan's Suit v. the Pittsburgh Post-Gazette

(MoneyWatch)  Mylan is suing two reporters and their employer, the Pittsburgh Post-Gazette, for the story they ran detailing alleged abuses of computer safety protocols at one of its factories. There's an agenda behind what's going on here; the paper and Mylan management have a longstanding beef that predates the recent story and Mylan CEO Robert Coury has a ton of personal money at stake.

The company said that Len Boselovic and Patricia Sabatini published:

... a series of sensational and misleading articles based on improperly obtained and misconstrued confidential internal documents. 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.

Here's one potential reason why Coury is so angry: The stories knocked 13 percent off Mylan's stock price. It has since regained its losses, but Coury is uniquely sensitive to Mylan's stock price because his compensation package (see page 21 of this SEC filing) requires him to maintain 500 percent of the value of his base salary in Mylan stock. He also received $2.6 million in stock awards last year and another $2.6 million in options. In total, Mylan stock was about 41 percent of his entire compensation last year.

So you can see that screwing up Mylan's stock, even briefly, has the potential to cost Coury hundreds of thousands of dollars in his personal net worth.

The West Virgina record points out that the P-G has cost Mylan dear in the past, at least in terms of wounding its pride:

When Mylan announced the promotion of Heather Bresch to COO in 2007, she said she had an MBA degree from West Virginia University. The newspaper had a story later questioning the degree.

A panel later concluded that WVU officials falsified Bresch's academic records to make it seem as if she finished the degree.

"The changes included adding 22 credits and grades 'pulled from thin air' to her transcript," the Post-Gazette later reported. "Officials then awarded her a degree retroactively that she did not earn."

After the report, Bresch's degree was revoked. And WVU President Michael Garrison, the university's provost and business school dean resigned.

BNET left a message with Mylan asking for a copy of the suit. The message was not immediately returned. Mylan said:

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.

As BNET pointed out two days ago, the paper's story, while dramatic, was at least partially confirmed by the FDA. The FDA said that "the software was overridden by the operator," which was the nut of the P-G's story.

It all begs a question: If the paper's story was so wrong -- and the FDA inspection vindicated Mylan -- why does Mylan want to get all those faulty documents? Perhaps Mylan believes that it will be easier for the P-G to enter into a settlement in which the paper stops covering Mylan, thus relieving the company of a headache -- and its management of scrutiny.

Another theory is that Mylan may believe that the leak of these documents and the tip regarding Bresch were the work of an insider, and the discovery process may reveal the disgruntled whistleblower's identity.

• Previously:
• Did Mylan's CEO Libel Pittsburgh Reporters Who Triggered FDA Probe?
• It's Not Mylan's First Quality Control Beef With FDA