They further said the CMS expressly told Mylan the product was incorrectly classified. US lawmakers and prosecutors are also investigating what impact Mylan's EpiPen pricing has had on government-funded health programs.
When criticism began from lawmakers and consumers about the whopping price of the EpiPen, which rose about 550 percent over the past decade, Mylan announced that it would would launch a generic alternative at a 50 percent discount of the list price.
Overall, CMS laid out nearly $1.3 billion on EpiPens for Medicare and Medicaid patients from 2011 to 2015, the agency said. EpiPen is approved under a New Drug Application (NDA) by the Food and Drug Administration (FDA), has patent protection, and has no FDA-approved therapeutic equivalents.
Wyden and Rep. Frank Pallone (D., N.J.) issued a statement in reaction to the news that Mylan was overcharging the government.
Under the generic classification, Slavitt said, Mylan paid a rebate of 13%, or $167 million, when it should have been paying a rebate of 23.1% or more.
"This incorrect classification has financial consequences for the amount that federal and state governments spend because it reduces the amount of quarterly rebates Mylan owes for EpiPen", Slavitt wrote.
Additionally, the lawmakers sought all communications referring to Mylan's tax rate, including documents that show Mylan's actual tax rate, taxable income and the amount of US income tax paid by Mylan to the IRS. "We will ensure taxpayers get their due". Mylan, after acquiring the drug in 2007, has raised the price of EpiPen by about sixfold, to over $600 for a package of two. The CMS found that is indeed what Mylan did. Senator Amy Klobuchar (D-Minn) has stated that Mylan misclassified the EpiPen as a generic drug instead of a branded drug. Evercore ISI analyst Umer Raffat, for one, said the liability the company faces is up to three times "the several hundred million" investors had previously estimated. Also, they have to pay additional rebates if their price increases rise more than inflation. But in a September 30 letter demanding more detailed information from Mylan, lawmakers said that figure included tax assumptions that may have underrepresented Mylan's profits. Mylan's classification of EpiPen Auto-Injector as a non-innovator drug is consistent with longstanding written guidance from the federal government. It's unclear why the change was made. After the rebate, Slavitt said, the net Medicaid spending on the product was about $797 million. The Grassley analysis was conducted by comparing newly released information about Medicare and Medicaid costs with the company's filings with the Securities and Exchange Commission.