HARRISBURG, Pa., March 24 /PRNewswire/ -- Attorney General Tom Corbett today announced that Pennsylvania received more than $2 million as part of a $124 million multi-state settlement with a Tennessee-based generic drug manufacturer accused of reporting inaccurate drug prices to the federal government as well as to state Medicaid programs.
Corbett said that the multi-state agreement was reached between 49 states and the District of Columbia and King Pharmaceuticals Inc. From 1994-2002, King Pharmaceuticals allegedly reported inaccurate drug prices to the federal government resulting in the company illegally reducing its Medicaid rebate payments.
As part of the settlement, Pennsylvania will receive $2,039,656 for the state's Medicaid Program. The Pennsylvania treasury will receive nearly $1.5 million of that amount. The remaining balance will go to the federal government to reimburse its share of Medicaid costs.
Additionally, King Pharmaceuticals will pay nearly $500,000 to state pharmaceutical assistance programs that are entitled to rebates, including the Pennsylvania program Pharmaceutical Assistance Contract for the Elderly or PACE.
Corbett explained that the alleged conduct violates the federal Medicaid drug rebate statute, which requires drug manufacturers to report accurate "best price" and "average manufacturer price" information to the government for purposes of calculating rebates, which the drug manufacturers pay to the states to ensure the state Medicaid programs purchase the drug at the manufacturers' lowest price for the product.
The federal Medicaid drug rebate statute is designed to return money to the Medicaid program in the form of rebates from drug manufacturers. Under the rebate statute, all pharmaceutical manufacturers must provide "best price" and "average manufacturer price" information to the Centers for Medicare and Medicaid Services. "Best price" is the lowest price that a manufacturer offers its products for sale to commercial purchasers. In order to have the pharmaceuticals eligible for Medicaid payment, Centers for Medicare and Medicaid Services uses this "best price" information to calculate rebates payable to the state Medicaid programs under the statute.
According to investigators, King Pharmaceuticals had consistently left out some of the best prices when making rebate calculations. As a result of these incorrect price calculations, Medicaid and other programs that should have received rebates from King Pharmaceuticals were underpaid approximately $62 million nationwide. King Pharmaceuticals will be required to pay double the amount which was underpaid.
"In our view, there is a clear distinction between making a profit and profiteering," Corbett said. "This case represents an illegal attempt to cheat a system designed to help elderly and low income citizens obtain affordable health care."
As part of the settlement, King Pharmaceuticals will enter into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Inspector General's Office, which will monitor the company's operations to ensure compliance with the law in the future.
The Commonwealth's settlement was led by Chief Deputy Attorney General William A. Helm of the Attorney General's Medicaid Fraud Unit, along with the U.S. Department of Justice and the National Association of Medicaid Fraud Control Units.
CONTACT: Barbara Petito Deputy Press Secretary 717-787-5211 petito@attorneygeneral.gov
Pennsylvania Office of Attorney GeneralCONTACT: Barbara Petito, Deputy Press Secretary, Pennsylvania Office ofAttorney General, +1-717-787-5211, or Cell, +1-717-215-1341, orpetito@attorneygeneral.gov
Web site: http://www.attorneygeneral.gov/
