Texas AG: Drug Maker to Pay $170M in Damages for Fraud

A Travis County (Texas) jury recently returned a record-setting verdict for damages against drug manufacturer Actavis Mid-Atlantic LLC, the Texas Attorney General’s office announced. The jury determined that Actavis and co-defendant Actavis Elizabeth LLC should pay Texas and the federal government $170.3 million for defrauding Medicaid.

The companies were found to have misrepresented drug prices to the taxpayer-funded Medicaid program.

Since 2000, the Texas Attorney General’s Civil Medicaid Fraud team has investigated multiple pharmaceutical manufacturers for their products’ prices to the Medicaid program. The state’s legal action against Actavis is one of those drug-pricing cases.

“The jury determined that the defendants owe $170 million because of improper drug price reporting,” Texas Attorney General Greg Abbott said in an announcement released by his office. “Considering the hundreds of millions of dollars that are at stake, we will continue to vigilantly pursue providers that falsely report prices to Medicaid and defraud the taxpayers.”

The state’s legal action against Actavis stems from a whistleblower lawsuit that was filed under seal by a small Florida-based pharmacy called Ven-a-Care. The pharmacy owners pursued their claim after discovering Actavis reported artificially inflated prices to Medicaid for its drugs.

Although the AG’s office has investigated multiple fraudulent drug pricing cases and successfully recovered hundreds of millions of dollars through pre-litigation settlements, the case against Actavis is the first to go to trial. Another manufacturer, Par Pharmaceuticals Inc. of New Jersey, is scheduled to face a separate state court action in May.

In late December, Mylan Laboratories Inc. agreed to pay damages totaling $65 million to the state and the U.S. government because it falsely reported inflated drug prices to the Medicaid program.

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 uses this drug pricing information to determine the rates at which pharmacies are reimbursed for products.

Source: Texas Attorney General’s Office