Merck & Co. has agreed to pay $24 million to the Massachusetts Medicaid program to settle long-running civil charges that it charged too much for some drugs. The details of the Medicaid fraud settlement were laid out by Attorney General Martha Coakley’s office. This settlement winds up a 2003 lawsuit filed against 13 drug makers over inflated prices for medicines that were sold in pharmacies. The state previously recovered a total of $23.4 million from the other 12 companies involved, but Merck, the nation’s second-largest drug maker, appealed a US District Court ruling in 2010 in favor of the state. Its decision to settle brings the entire case to a close.
Attorney General Coakley said her office’s Medicaid fraud division wanted to hold accountable drug companies that defraud taxpayers. The state could have accepted $1.5 million to $2 million two years ago as part of a settlement of a related federal case against Merck, but it chose to press its own case against the Whitehouse Station, N.J., company. The Attorney General stated:
We felt we had the ammunition and it was important that we push forward with this case. Companies will charge what they can as long as they feel they can get away with it. We’re going to keep a tight watch on how taxpayers’ money is spent.
The state’s eight-year-old complaint against the 13 companies accused them of knowingly submitting inflated prices to price-reporting services between 1995 and 2003. Initially, the suit named Warrick Pharmaceuticals Corp., a generic drug unit of the former Schering-Plough Corp., as a Defendant. That company was bought by Merck for $41 billion in 2009.
The suit alleged that Warrick reported false and inflated prices to services such as First Data Bank for a trio of treatments for asthma and other respiratory diseases. More than 40 state Medicaid programs – including the one in Massachusetts – rely on the reporting services to determine their reimbursements to pharmacies that fill prescriptions. Commercial health insurance carriers also consult the services.
The companies that previously settled with Massachusetts in this litigation were Mylan Inc., Par Pharmaceutical Inc., Actavis Elizabeth LLC, Dey Inc., Barr Laboratories Inc., Duramed Pharmaceuticals Inc., Ethex Corp., Teva Pharmaceuticals USA, Ivax Corp., Roxane Laboratories Inc., Watson Pharma Inc., and Watson Pharmaceuticals Inc. Massachusetts and other states, including Texas and Wisconsin, as well as the federal government, have mounted Medicaid fraud prosecutions against drug makers in recent years in areas such as false pricing, kickbacks, and off-label promotion of treatments.
There is no telling how much is lost by the federal government each year as a result of corporations, which are doing business with some agency or program, cheating the government in some manner. Obviously, the public doesn’t realize the magnitude of the problem. If it did, there would be major changes in how Corporate America operates in dealing with federal and state programs as contractors.
Source: Boston Globe and Los Angeles Times
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