Under the terms of a settlement, Mylan Laboratories Inc. will have to pay $65 million to state and federal authorities. This settlement was the result of an agreement with Texas Attorney General Greg Abbott over charges that Mylan inaccurately reported drug prices to the Texas Medicaid program. Under the agreement, Texas, as its share of the recovery, will receive $23 million. The price Mylan provided to retail pharmacies caused the taxpayer-funded Texas Medicaid program to significantly overpay the pharmacies for certain generic drugs.
In 2007, Texas filed suit against Mylan and two other drug manufacturers. The first of those three cases settled last summer when Teva Pharmaceutical Industries Ltd. paid $169 million to resolve claims brought by Texas, several other states and the federal government. The three Defendants named in the Texas lawsuit were:
In order for pharmaceutical products to be eligible for reimbursement from Medicaid, Texas law requires that manufacturers accurately report market prices to the taxpayer-funded program. The Medicaid program bases its reimbursement to pharmacies on the pricing information reported to it by drug manufacturers. If Alabama citizens believe this all sounds familiar, it should. As you will recall, the State of Alabama filed a number of lawsuits against drug manufacturers based on identical claims. Several juries ruled in Alabama’s favor, but the Alabama Supreme Court later ruled for the drug companies on the state’s fraud claims.
It was revealed in a three-year investigation that the Defendants sold hundreds of Medicaid-covered drugs in Texas at steeply-discounted prices to large pharmacies such as Wal-Mart, CVS, Walgreens, and others — but concealed this same pricing information from the Texas Medicaid program. State officials were misled about current market prices for the drugs. Medicaid reimbursed the retailers at significantly higher rates than the discounted rates already established between the Defendants and retailers. Since 2003, settlements in the drug-pricing cases have recovered more than $300 million for the Texas Medicaid program.
Source: Insurance Journal
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