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Attorney General Jason R. Ravnsborg

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

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

PIERRE, S.D.- Attorney General Marty Jackley announced today that South Dakota has joined with other states and the federal government and reached agreement with four pharmaceutical companies that will pay a total of $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. The State of South Dakota will recover $115,000 as their part of the settlement.

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 these 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.

The South Dakota Medicaid Fraud Control Unit and the South Dakota Department of Social Services assisted in recovering the settlement money. For additional information about this recovery please contact Sara Rabern at 605-773-3215.