Texas AG Recovers $65M from Pharmaceutical Company

Mylan Laboratories Inc. has agreed to pay $65 million to state, federal authorities as a result of an agreement with Texas Attorney General Greg Abbott over charges that the firm inaccurately reported drug prices to the Texas Medicaid program.

Under the agreement, Texas’ share of the recovery is $23 million.

Court documents filed by the state indicate that the price Mylan provided to retail pharmacies caused the taxpayer-funded Texas Medicaid program to significantly overpay the pharmacies for certain generic drugs.

In 2007, Texas initiated 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 AG’s 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.

According to the AG’s office three-year investigation revealed that 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 this same pricing information from the Texas Medicaid program.

As a result, state officials were misled about current market prices for the drugs. Thus, Medicaid reimbursed at significantly higher rates than the discounted rates already established between the defendants and retailers.

The scheme was brought to the state’s attention by Ven-a-Care of the Florida Keys Inc., the AG’s office said. Since 2003, settlements in the Ven-a-Care drug-pricing cases have recovered more than $300 million for the Texas Medicaid program.

Source: Texas Attorney General’s Office