Under the settlement agreements, Upsher-Smith Laboratories of New Jersey, and Forest Laboratories and its subsidiary Inwood Laboratories of New York, must pay the State of Texas a total of $7.9 million and $3 million, respectively. The $10.9 million recovery for the State includes $1.1 million in attorney fees assessed against the defendants. 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 State's enforcement actions cited the defendants for misreporting the prices of various drugs to the Medicaid program. As a result, Medicaid was overcharged for certain of the companies' products.
Under 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 Office of the Attorney General's enforcement action charged both defendants with using their illegally created spreads to unlawfully induce pharmacies and other providers to purchase the defendants' products.
Since 2002, the Civil Medicaid Fraud Division's recoveries for the State of Texas passed the $400 million mark - while total recoveries for the state and federal governments now exceed $1 billion.
To obtain more information about the Office of the Attorney General's efforts to fight Medicaid fraud, access the agency's website at www.texasattorneygeneral.gov.