Sep 28, 2016 2 min read

WASHINGTON – Senators are asking the Justice Department to investigate whether pharmaceutical company Mylan acted illegally when it classified its life-saving EpiPen as a generic drug and qualified for lower rebate payments to states.

Sen. Charles Grassley, R-Iowa, chairman of the Senate Judiciary Committee, and Democratic Sens. Richard Blumenthal of Connecticut and Amy Klobuchar of Minnesota sent a letter to Attorney General Loretta Lynch Wednesday suggesting the company may have gamed the system to divert millions of dollars from taxpayers.

Mylan is based in Southpointe and incorporated in the Netherlands.

Mylan CEO Heather Bresch is under fire in Congress as the price of the emergency allergy shots skyrocketed in recent years. The list price of EpiPens grew to $608 for a two-pack, an increase of more than 500 percent since 2007.

At a House hearing last week, Bresch said her company, with sales in excess of $11 billion, doesn’t make much profit off each pen and she signaled Mylan has no plans to lower prices. Republicans and Democrats criticized her for being vague about the company’s finances and profits.

In the letter, the senators said Mylan “may have knowingly misclassified EpiPens, potentially in violation of the False Claims Act and other statutes.”

Under the Medicaid Drug Rebate Program created by Congress, drug companies pay a percentage of their revenues to states – known as rebates – to try and help protect states from high drug prices. The drug companies themselves are responsible for deciding whether their products should be classified as non-innovator drugs, which pay smaller rebates to the states, or innovator drugs, which pay larger rebates.

Mylan classified the EpiPen as a non-innovator multiple source drug. That classification usually is reserved for older drugs available from multiple sellers. That means the company is paying lower rebates, even though there is currently no direct competitor to the EpiPen.