Bryan Cohen Sep. 5, 2013, 2:00pm

AUSTIN (Legal Newsline) - Texas Attorney General Greg Abbott
announced on Wednesday that the state of Texas and the federal
government jointly settled with Major Pharmaceuticals Inc. to resolve
allegations of Medicaid fraud.

Major Pharmaceuticals and The Harvard Drug Group LLC allegedly
misreported the price of multiple generic drugs to the Medicaid
program. As a result, Medicaid was overcharged for certain products
manufactured by Major Pharmaceuticals.

Because Medicaid is jointly funded by the state and the federal
government, Texas and the federal government will equally share in the
$5 million settlement fund. Ven-A-Care of the Florida Keys Inc., a
pharmacy that filed a whistleblower lawsuit pursuant to the Texas
Medicaid Fraud Prevention Act, is also entitled to a share of the
overall recovery.

State and federal law dictates that drug manufacturers must file
reports with the Medicaid program disclosing the prices they charge
distributors, wholesalers and pharmacies for their products. If a
manufacturer falsely reports inflated market prices for their drugs,
Medicaid reimburses pharmacies at highly inflated rates. The
difference between the actual market price of a drug and the
reimbursement amount is called the spread.

Abbott's office alleged Major Pharmaceuticals used unlawfully created
spreads to illegally induce pharmacies and other providers to buy the
company's products.

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