Attorney General Patrick C. Lynch today announced that Rhode Island is receiving $377,083.93 in state and federal monies in a settlement with four pharmaceutical companies, Mylan Pharmaceuticals Inc. (MPI), UDL Laboratories Inc. (UDL), AstraZeneca Pharmaceuticals LP and Ortho McNeil Pharmaceutical Inc., to resolve claims that they violated the False Claims Act by failing to pay appropriate rebates for drugs that were paid for by Medicaid.

Of that amount, $179,764.07 will be forwarded to the State Department of Human Services, which administers Medicaid, the joint state-federal health insurance program for low-income Americans. The balance of the recovered monies represents the federal portion of the Medicaid recovery and will go to the US Department of Health and Human Services.

Rhode Island is one of the states that joined with the federal government to reach agreement with the four pharmaceutical companies involved.

“This is yet another instance of big pharmaceutical companies seeking to inflate their own profits at the expense of a program dedicated to the health needs of the economically poor in our nation, and right here in Rhode Island,” Lynch said. “It’s unconscionable for drug companies to bilk Medicaid and, by extension, to display such arrogance toward the people dependent on the drugs in question for medication and toward the taxpayers who bear the burden of abuse of our government’s health-care programs.”

The four pharmaceutical companies agreed to pay a settlement totaling $124 million to resolve allegations that it had sold innovator drugs manufactured by other companies that they had classified as non-innovator drugs for Medicaid rebate purposes. The amount of a rebate is determined in part by whether a drug is a brand-name drug, or innovator drug, or a generic, or non-innovator drug. The rebate that must be paid for innovator drugs is higher than the rebate for non-innovator drugs, and as a result of the improper classification, the companies underpaid their rebate obligations to the Medicaid Program.

MPI and UDL agreed to pay $118 million to resolve allegations that they underpaid their rebate obligations with respect to several MPI and UDL drugs. AstraZeneca agreed to pay $2.6 million to resolve allegations that it underpaid its rebate obligations with respect to Albuterol. Ortho McNeil agreed to pay $3.4 million to resolve allegations that it underpaid its rebate obligations with respect to Dermatop.

Lynch’s office has recovered close to $3 million for the state from Medicaid fraud settlements during this calendar year.

A National Association of Medicaid Fraud Control Units team participated in the settlement negotiations with all four pharmaceutical companies on behalf of the settling states. Team members included representatives from the AGs’ offices for the states of New Hampshire, Ohio and New York.

# # #

Related links