WASHINGTON – Mylan pharmaceutical misclassified its high-priced EpiPen in a way that will lead Minnesota Medicaid authorities to overpay the drug company an estimated $4.3 million this year, U.S. Sen. Amy Klobuchar, D-Minn., said Thursday night.

The senator said the Centers for Medicare and Medicaid Services (CMS) has "found that Mylan misclassified the EpiPen" as a "non-innovator" drug. The non-innovative status was tantamount to a generic classification.

The soaring cost of EpiPens — epinephrine auto-injectors that can be life-savers for people suffering severe allergic reactions — has been a subject of controversy. The price of an EpiPen two-pack has soared from about $100 in 2007, when Mylan acquired the treatment, to around $600 today.

The generic designation led state-run Medicaid programs across the country to pay Mylan more for EpiPens than they should have in rebates, according to Klobuchar. Companies are supposed to discount a portion of the price of Medicaid drugs back to the states that administer the program.

Klobuchar, Sen. Charles Grassley, R-Iowa, and Sen. Richard Blumenthal, D-Conn., sent a letter to CMS Aug. 30 asking how a brand-name product like EpiPen could qualify for discount rates designated for generics. Klobuchar heard Thursday from CMS that EpiPens were misclassified and so the discounts coming from Mylan to the states were lower than they should have been.

"I am deeply troubled by Mylan's misclassification of the EpiPen as a generic drug," Klobuchar said in a statement Thursday night. "The Minnesota Department of Human Services has estimated that this misclassification will cost our state more than $4 million in overpayment this year alone. That's just one state, over the course of one year, for one drug. This egregious action warrants an immediate and thorough nationwide investigation by the Centers for Medicare and Medicaid Services into the overpayments by all states."

Klobuchar

Mylan refuted Klobuchar's contention about overpayment in a statement to the Star Tribune Friday morning.

The company said it had complied with all Medicaid rules for discounts – also called rebates - as well as federal laws. The company said EpiPen's status as a "non-innovator" drug pre-dated Mylan's 2007 acquisition of the product. "Mylan's classification of EpiPen as a non-innovator drug is consistent with longstanding written guidance from the federal government," the company said in the statement.

A new federal rule requires Mylan and other companies who received non-innovator status for new drugs to reapply with CMS for the generic status by April 1, 2017.

"Mylan intends to file an application for non-innovator status regarding EpiPen," the company said. "It would be premature to comment further on this issue until CMS makes its decision on our application."

Jim Spencer • 202-662-7432