Texas Attorney General Greg Abbott announced on Oct. 16, 2014 that his office settled an enforcement action against Ranbaxy, a generic drug manufacturer, for fraudulently reporting inflated drug prices to the Medicaid program. The case against Ranbaxy is one of hundreds filed by Texas and fellow AWP prosecuting States across the nation in the last 15 years.
According to the State, in September 2012 Texas filed a lawsuit against the defendants alleging violations of the Texas Medicaid Fraud Prevention Act (“TMFPA”). The State’s investigation found that since 1997, Ranbaxy violated Texas law when it misreported the prices of various drugs to the Medicaid program. As a result, Medicaid reimbursed pharmacies more than it should have for certain of the companies’ products.
Under Texas state law, drug manufacturers must file reports with the Medicaid program that disclose the prices they charge pharmacies, wholesalers and distributors for their products.
When manufacturers improperly report inflated market prices for their drugs, Medicaid reimburses pharmacies at vastly inflated rates. The difference between the reimbursement amount and the actual market price is referred to as the “spread.” The Attorney General’s office accused Ranbaxy of illegally misreporting prices to Medicaid in order to create spreads that would induce pharmacies and other providers to purchase Ranbaxy’s products over its competitors’ products.
Under the settlement agreement, Ranbaxy must pay the State of Texas a total of $17.875 million for the State’s general revenue fund. Because the Medicaid program is jointly funded by the State and U.S. taxpayers, the federal government is entitled to a percentage of the settlement proceeds. The federal government’s share is also $17.875. Additionally, the Texas Attorney General’s Office will receive $4 million in attorneys’ fees and costs. The payments will be made in four installments, beginning this November and ending next year.
Source: Texas AG Press Release
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