$54 million settlement reported with 2 drug companies over Medicaid charges

AstraZeneca Pharmaceuticals, a London and Delaware-based pharmaceutical manufacturer, and Cephalon, Inc, a Pennsylvania-based subsidiary of Teva Pharmaceuticals Industries, allegedly underpaid drug rebates owed to the states.

Officials said Massachusetts’s share of the proceeds will go to the state’s Medicaid program, known as MassHealth, which provides medical care for the poor.

In other news, Schneiderman also said on Wednesday the guilty plea of a Rochester state Department of Transportation worker accused of making fraudulent workers’ compensation claims. “The fraud committed caused the State Medicaid programs to overpay for drugs”.

According to the release, federal law requires drug companies to pay the rebates, which are calculated on the basis of a percentage of the average price paid by wholesalers. This average price, which the manufacturer reports to the federal government, is known as the Average Manufacturer’s Price or “AMP”. The greater the AMP reported by the manufacturer, the greater the rebate the manufacturer must pay for that drug. A whistleblower complaint alleged that the companies used accounting techniques to reduce the average manufacturer price reported to the federal government, which resulted in the companies underpaying drug rebates to the states.

The investigation started from a whistle-blower lawsuit filed in federal court in Pennsylvania.

As part of the settlement, Arkansas will receive nearly $134,000 in restitution and other recovery. The matter in New York was handled by Jay Speers, Counsel to the New York MFCU.