Four Pharmaceutical Companies Agree to Pay $124 Million for Alleged Submission of False Claims to Medicaid

BALTIMORE, MD ( October 22, 2009) - Attorney General Douglas F. Gansler announced today that Maryland has joined with other states and the federal government and reached agreement with four pharmaceutical companies to pay $124 million to resolve claims that they violated the False Claims Act by failing to pay appropriate rebates for drugs that were paid for by Medicaid.

Mylan Pharmaceuticals, Inc. (“MPI”), UDL Laboratories, Inc. (UDL), AstraZeneca Pharmaceuticals LP, and Ortho McNeil Pharmaceutical, Inc., are participants in the Medicaid Rebate Program and executed rebate agreements with the United States. By agreeing to participate in the Medicaid Rebate Program and signing the rebate agreements, the companies agreed to pay quarterly rebates to Medicaid that were based upon the amount of money that Medicaid paid for each company’s drugs. The precise amount of a rebate is determined in part by whether a drug is considered an “innovator” drug or a “non-innovator” drug. The rebate that must be paid for innovator drugs is higher than the rebate for non-innovator drugs.

Each of the companies agreed to pay a settlement to resolve allegations that it had sold innovator drugs that were manufactured by other companies and had classified those drugs as non-innovator drugs for Medicaid rebate purposes. As a result of the improper classification of these drugs, 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 drugs and several UDL drugs. From the total, $7,279,135 will be paid to entities that participated in the Public Health Service’s Drug Pricing Program. 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.

As part of the settlements, the State of Maryland will recover $862,267.29 in total.

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 Offices of the Attorneys General for the States of New Hampshire, Ohio, and New York.