CMS' comments came after a trio of U.S. senators wrote the Justice Department asking if it was considering an investigation of whether Mylan violated the law "when it apparently misclassified its EpiPen product for the purposes of the Medicaid Drug Rebate Program."
"The facts laid out ... suggest that Mylan may have knowingly missclassified EpiPens, potentially in violation of the False Claims Act and other statutes," said the letter from Sens. Amy Klobuchar, D-Minn, Richard Blumenthal, D-Conn. and Charles Grassley, R-Iowa.
Under the Medicaid rebate program, Mylan is paying Medicaid a rebate of 13 percent for every EpiPen it sells through that health-coverage program for primarily poor people, because the company has classified the device as a generic product.
But CMS said Wednesday that Mylan should be paying, but isn't, a rebate rate of 23.1 percent for brand-name drugs, as well as an inflation rebate that is legally required when drugmakers raise the prices of brand-name drugs above the inflation rate.
"CMS has, on multiple occasions, provided guidance to the industry and Mylan on the proper classification of drugs, and has expressly advised Mylan that their classification of EpiPen for the purposes of the Medicaid Drug Rebate Program was incorrect," said CMS spokesman Aaron Albright.
"This incorrect classification has financial consequences for the amount that federal and state governments spend by reducing the amount of quarterly rebates Mylan owes for EpiPen," Albright said.
CMS noted that EpiPen is currently classified by Mylan as a non-innovator multiple source, or generic, drug in that rebate program.
However, the device was approved under a "New Drug Application" by the Food and Drug Administration, has patent protection and has no FDA-recognized therapeutic equivalents. That means it does not meet the definition of a multiple-source drug, but it does meet the definition of a single-source drug, which is supposed to result in the higher rebate amount, according to CMS.
Mylan, whose CEO Heather Bresch is the daughter of U.S. Sen. Joe Manchin, D-W.Va., has come under fire from Congress and consumers for having hiked the price of EpiPens more than 500 percent in recent years.
EpiPens now sell for more than $600 per two-pack, or more than $300 apiece. When Mylan bought the product in 2007, they were selling for about $57 apiece.
The devices are used to counteract the potentially fatal allergic reaction anaphylaxis. Experts have said the auto-injection devices likely cost not more than $30 to make, and that the medication contained in them, epinephrine, costs just a $1 or so.