Federal Gov't Said to Claim Mylan (MYL) Overcharged Medicaid Over EpiPen

October 6, 2016 6:29 AM EDT

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Mylan (Nasdaq: MYL) shares are on watch following news that the Federal government is accusing the company of overcharging the Medicaid program by millions of dollars for its EpiPen product.

The WSJ noted commentary from Acting Administrator Andy Slavitt of the federal Centers for Medicare and Medicaid Services (CMS) in a letter on Wednesday.

Slavitt said Mylan incorrectly classified EpiPen as generic, when it should have been classified as brand name. That allow Mylan to pay a rebate of just 13%, or around $163 million, versus a rebate of 23.1 percent or more than it should've been paying.

Slavitt noted that the CMS has, on multiple occasions provided guidance to the industry and Mylan on the proper classification of drugs and has expressly told Mylan that the product is incorrectly classified.

Shares of Mylan are flat Thursday morning.

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