AUSTIN – Texas Attorney General Greg Abbott secured a $10 million agreement with New Jersey-based West-Ward Pharmaceuticals Corp. The agreement resolves the State’s lengthy civil Medicaid fraud investigation against West-Ward for fraudulently reporting inflated drug prices to the Medicaid program for nearly 10 years.

Under the settlement agreement, West-Ward must pay the State of Texas a total of $4.5 million for the State’s general revenue fund. Because the Medicaid program is jointly funded by the State and U.S. taxpayers, the federal government is entitled to a percentage of the settlement proceeds.

Since 2000, the Texas Attorney General’s Civil Medicaid Fraud team has investigated multiple pharmaceutical manufacturers for reporting inflated drug prices to the Medicaid program. The State’s investigation against West-Ward found that since 1995, West-Ward violated Texas law when it misreported the prices of various drugs to the Medicaid program. As a result, Medicaid reimbursed pharmacies more than it should have for certain of the companies’ products.

Under state law, drug manufacturers must file reports with the Medicaid program that disclose the prices they charge pharmacies, wholesalers and distributors for their products. When manufacturers improperly report inflated market prices for their drugs, Medicaid reimburses pharmacies at vastly inflated rates. The difference between the reimbursement amount and the actual market price is referred to as the “spread.” The Office of the Attorney General accused West-Ward of using its illegally created spreads to unlawfully induce pharmacies and other providers to purchase West-Ward’s products.

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