Texas AG announces Medicaid settlements of $10.9 million with drug manufacturers

AUSTIN, Texas (Legal Newsline) – Texas Attorney General Greg Abbott announced two settlement agreements Wednesday with two drug manufacturers that allegedly misreported the prices of various drugs to the Medicaid program.

Under the terms of the agreements, Upsher-Smith Laboratories of New Jersey and Forest Laboratories, along with Forest’s subsidiary Inwood Laboratories of New York, must respectively pay the state $7.9 million and $3 million. Because the Medicaid program is jointly funded by U.S. and state taxpayers, the federal government is entitled to a percentage of the proceeds.

The $10.9 million recovery also includes $1.1 million in attorney fees assessed against the defendants.

State law requires drug manufacturers to file reports with the Medicaid program to disclose the prices they charge distributors, wholesalers and pharmacies for their products. When manufacturers improperly report inflated market prices for drugs, Medicaid reimburses pharmacies at inflated rates. The difference between the actual market price and the reimbursement amount is called the spread.

Abbott’s enforcement action alleged that the companies used illegally created spreads to unlawfully induce pharmacies and other providers to buy the defendants’ products and misreported the prices of multiple drugs to the Medicaid program.