TEXAS Attorney General Abbott Recovers $15.7 Million In Medicaid Costs Under National Settlement


AUSTIN – Texas Attorney General Greg Abbott recovered more than $15.7 million for the State of Texas under a national settlement with one of the nation’s largest pharmaceutical manufacturers. The agreement resolves a civil Medicaid fraud enforcement action that Texas and 42 other states filed against Bristol-Myers Squibb Co. (BMS) and its subsidiary, Apothecon regarding their alleged illegal marketing and pricing practices.

According to court documents filed by the states, the defendants failed to comply with state and federal laws that require pharmaceutical companies to report their lowest drug prices to the Medicaid program. As a result, the taxpayer-funded program was defrauded when it overpaid for BMS’ anti-depression drug, Serzone. According to investigators, a wide assortment of BMS and Apothecon’s generic and oncology drug prices were also improperly reported to the states’ Medicaid programs.

State and federal laws require drug manufacturers to report their products’ sales prices to Medicaid. This reporting requirement applies to pricing schemes the manufacturers offer a variety of providers, including pharmacies, wholesalers and distributors. The Texas Medicaid program uses this pricing information to estimate the amount Medicaid’s pharmacy providers pay to acquire the drug manufacturers’ products.

When pharmacies bill the state-run, taxpayer-funded program for prescription drugs and dispensing fees Medicaid’s reimbursement rates are based on the manufacturer-reported pricing information. Because of the falsely reported prices, Medicaid reimbursed pharmacies and other providers at vastly inflated rates. The resulting windfall profits unlawfully induced those health care vendors to purchase the defendants’ products.

State and federal law also prohibits pharmaceutical companies from marketing their products for uses that have not been approved by the U.S. Food and Drug Administration. The multi-state investigation also revealed that BMS improperly marketed and promoted Abilify, an atypical antipsychotic drug, between 2002 and 2005. According to investigators, the defendant unlawfully marketed the product for pediatric use and as a dementia-related psychosis treatment when it had no FDA approval for such use.

This enforcement action stems from a sealed whistleblower lawsuit filed by home-infusion pharmacy Ven-a-Care of the Florida Keys Inc. Acting on similar information from Ven-a-Care, the Attorney General has taken action against numerous defendants for launching similar drug-pricing schemes. Among these are Schering-Plough/Warrick Pharmaceuticals in May 2004 ($27 million); Dey Inc. in June 2003 ($18.5 million); Boehringer Ingelheim/Roxane Laboratories in November 2005 ($10 million); and Baxter Healthcare Corp. in June 2006 ($8.5 million).

The Attorney General’s legal actions against B Braun Medical Inc. of Pennsylvania and Abbott Laboratories Inc. of Illinois remain pending.

Today’s development continues the Attorney General’s crackdown on waste, fraud and abuse in the Medicaid system. In 2006 alone, the Texas Medicaid program cost more than $17 billion. To save taxpayer dollars, Attorney General Abbott has dramatically expanded both the Civil Medicaid Fraud Section and the Medicaid Fraud Control Unit. Since Attorney General Abbott took office, the civil and criminal Medicaid fraud sections have recovered more than $200 million.

With the passage of amendments to the Texas Medicaid Fraud Prevention Act in 1997, the Texas Legislature paved the way for whistleblower lawsuits involving industry insiders, such as Ven-a-Care. Under the law, whistleblowers may be eligible for a percentage of damages recovered.

To obtain more information about the Attorney General’s efforts to fight Medicaid fraud, access the agency’s Web site at http://www.texasattorneygeneral.gov.


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