Texas Attorney General Greg Abbott today announced the settlement of legal action against Mylan Laboratories over allegations the company inaccurately reported drug prices to the Texas Medicaid program.
LEGAL ACTION SETTLED – Mylan Laboratories will have to pay the state $23 million following the settlement of legal action over the company inaccurately reporting drug prices to the Texas Medicaid program.
Under today’s settlement, Mylan must pay $65 million to the state and the federal government. Texas’ share of the recovery is $23 million.
The state’s court action against Mylan stemmed from the company’s alleged failure to properly report the price of its drugs to the Texas Medicaid program. Court documents filed by the AG’s office indicated the price Mylan provided to retail pharmacies caused the taxpayer-funded Texas Medicaid program to significantly overpay pharmacies for some generic drugs.
In 2007, Texas took legal action 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 Attorney General’s original enforcement action were:
Teva Pharmaceuticals Inc. of Pennsylvania (with subsidiaries Lemmon Pharmaceuticals Inc., Copley Pharmaceuticals Inc. Ivax Pharmaceuticals Inc., Sicor Pharmaceuticals Inc., Teva Novopharm Inc. and Teva Pharmaceutical Industries, Ltd.), Mylan Laboratories Inc. of Pennsylvania (with national subsidiaries Mylan Pharmaceuticals Inc. and UDL Laboratories Inc.), and Sandoz Inc. of New Jersey (with subsidiaries Geneva Pharmaceuticals Inc., Novartis Pharmaceuticals Inc., Eon Labs and Apothecon Inc.).
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.
The state’s three-year investigation revealed the defendants sold hundreds of Medicaid-covered drugs at steeply discounted prices to large pharmacies such as Wal-Mart, CVS, Walgreens and others, but concealed that pricing information from the Texas Medicaid program.
As a result, state officials were misled about current market prices for the drugs. When pharmacies sought Medicaid reimbursement for the drugs in question, the false price reports led the Texas Medicaid program to unnecessarily spend millions of taxpayer dollars on the products. This resulted in Medicaid reimbursing at significantly higher rates than the discounted rates already established between the pharmaceutical companies and large pharmacies.
The scheme was brought to the state’s attention by Ven-a-Care of the Florida Keys Inc., an industry whistleblower.
Since 2003, settlements in the Ven-a-Care drug-pricing cases have recovered more than $300 million for the Texas Medicaid program.
