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Mylan falls after lawmaker reveals 'misclassification' led to drug overpayment

Heather Bresch, CEO Mylan
Michael Nagle | Bloomberg | Getty Images

Shares of Mylan extended losses Friday after a lawmaker said the Centers for Medicare and Medicaid Services found that Mylan misclassified the lifesaving EpiPen device.

CMS found that Mylan had misclassified the EpiPen as a "non-innovator multiple source drug," or a generic drug.

The error resulted in the overpayment for the drug by the government on a federal and state level through the Medicaid Drug Rebate Program.

For drugs classified as generic, companies pay a 13 percent rebate to Medicaid, compared to the 23 percent rebate for branded drugs. 

"The Minnesota Department of Human Services has estimated that this misclassification will cost our state more than $4 million in overpayment this year alone," wrote Senator Klobuchar in a letter to the Centers for Medicare & Medicaid Services (CMS).

Klobuchar demanded a nationwide investigation by CMS.