The government backlash against Mylan's (MYL) - Get Report sales practices for the EpiPen, its popular epinephrine auto-injector for severe allergies, shows no sign of ending.

In the latest development, the New York Attorney General's office announced that it is investigating Mylan's EpiPen 4 Schools program, which supplies the lifesaving auto-injector to kindergartens, elementary, middle and high schools.

"No child's life should be put at risk because a parent, school, or healthcare provider cannot afford a simple, life-saving device because of a drug-maker's anti-competitive practices," New York Attorney General Eric Schneiderman said in a statement.

According to Schneiderman, who announced the investigation Sept. 6, Mylan may have inserted anti-competitive terms into its contracts with schools. At issue is whether the company's demands that the schools do business with no other supplier violates antitrust law. The company denies that is the case.

"The program continues to adhere to all applicable laws and regulations. There are no purchase requirements for participation in the program, nor have there ever been to receive free EpiPen auto-injectors," a Mylan spokesperson wrote in an email to TheStreet.

"Previously, schools who wished to purchase EpiPen auto-injectors beyond those they were eligible to receive free under the program could elect to do so at a certain discount level with a limited purchase restriction, but such restriction no longer remains," the spokesperson added.

Mylan is also taking flak from several states for allegedly inappropriately labeling Epipens a generic product for purposes of gaining rebates from their Medicaid programs, a charge the company also denies. The action at the state level follows a Congressional hearing into Mylan's EpiPen pricing last week.

The controversies stem from allegations that Mylan was "price gouging" patients, charging up to $600 for a set of two EpiPens. The company raised its prices approximately 25% each year, as compared to the drug industry's 10% average price increase for drugs.

Since then, Mylan has taken steps to lower the price of the drug for patients, including boosting its patient assistance program and pledging to offer a generic version of epinephrine to patients.

Still, regulators and patients alike are upset that the company was able to boost prices so quickly, and without many consequences.

This is why other states may choose to follow in New York's footsteps and launch an investigation into Mylan's presence in schools.

According to Andy Klevorn, an antitrust lawyer at Katten Muchin Rosenman LLP, California and Florida will likely take the biopharmaceutical company on next.

"Those are the ones that are most active," Klevorn said in an interview. "If they're successful, other states tend to follow their lead. The Department of Justice or Federal Trade Commission might also look into this."

In eleven states, schools are required to have epinephrine on hand in an nurse's office. In 49 states (all but Hawaii), schools are approved to participate in programs like Mylan's Epipen 4 Schools.

Mylan's program provides two sets of EpiPens to a school nurse's office for free, and allows schools to refill the drug if it is used in a life-saving event. A sample of the contract terms are unavailable online or in the public domain.

Klevorn noted that while exclusive supply agreements don't necessarily amount to an anti-competitive practice, New York is likely investigating the question based on the number of contracts Mylan has with its schools. If the practice applies to enough schools, or once did, he said, that could raise anti-competitive flags.

The process of an antitrust investigation typically takes at least a year, Klevorn noted.

If Mylan is found to be in violation of New York's antitrust laws, the company could face some hefty fines, as well as possible restitution payments on behalf of New York's school districts.

Then, class action lawsuits from patients and schools, as well as investigations from other states, could follow.

Mylan, which has a market cap of $21.55 billion, was trading at $40.30 Wednesday, down 0.25% from market's open.