New Jersey pharmaceutical companies caught charging fraudulent prices for Medicaid reimbursed drugs in the Lone Star State has resulted in a recovery of over $11 million for the Texas general revenue fund, Texas Attorney General Greg Abbott announced today.
Abbott’s July 2008 enforcement action charged that several New Jersey companies provided inaccurate prices for certain generic drugs causing the Medicaid program to over-reimburse those pharmacies for those products.
Watson/Schein Pharmaceuticals Inc. of New Jersey was charged by the Attorney General’s office with improperly reporting drug prices.
Alpharma USPD/Purepac Inc., Barr Pharmaceuticals Inc., and Par Pharmaceutical Inc., all based in New Jersey were also charged. All of these Medicaid fraud cases have been resolved, with the exception of Alpharma/Purepac.
“Since 2000, the Texas Attorney General’s Civil Medicaid Fraud team has investigated multiple pharmaceutical manufacturers for incorrectly reporting their products’ prices to the Medicaid program,” Abbott’s office stated in a release. “The State’s legal action against Watson is another of those drug-pricing cases.”
“Under state and federal law, drug manufacturers must file reports with the Medicaid program that disclose the prices they charge pharmacies, wholesalers and distributors for their products.”
“The Texas Medicaid program uses manufacturer-supplied pricing information to estimate the amount Medicaid pharmacy providers should pay to acquire the drug manufacturers’ products.”
“Pharmacies bill the state-run, taxpayer-funded program for the cost of prescription drugs, plus dispensing fees. Medicaid reimburses pharmacies based on the manufacturer-reported pricing information.”
“When manufacturers improperly report market prices for their drugs, Medicaid reimburses pharmacies at vastly inflated rates,” Abbott said. “The difference between the reimbursement amount and the actual market price is referred to as the ‘spread.’”
The enforcement action charged the defendant drug companies with using their illegally created spreads since the early 1990s.
Watson Pharmaceuticals will pay $79 million to resolve the enforcement actions.
Since Medicaid is jointly funded by the State and the federal government, the federal government is entitled to a share of the total monetary settlement.
Under the False Claims Act, Ven-a-Care of the Florida Keys receives a share of the State’s recovery because the relator uncovered the defendants’ fraudulent conduct.
The defendants’ improper pricing was brought to the State’s attention by the relator, Ven-a-Care of the Florida Keys Inc., an industry whistleblower.
Since 2003, settlements in the Ven-a-Care drug-pricing cases have recovered more than $350 million for fraud against the Texas Medicaid program.
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