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Attorney General Koster announces settlement with AstraZeneca Pharmaceuticals, LP and Cephalon, Inc.

–settlements will return more than $630,000 to Missouri’s Medicaid program–

 

Jefferson City, Mo. – Attorney General Chris Koster today announced an agreement with two drug companies to settle allegations that they two drug companies overcharged the state Medicaid programs for drugs.  AstraZeneca Pharmaceuticals, LP, a London and Delaware-based pharmaceutical manufacturer, has paid the states and the federal government $46.5 million to resolve allegations against the company, of which Missouri will receive $1.7 million.  Cephalon, Inc., a Pennsylvania-based subsidiary of Teva Pharmaceuticals Industries, Ltd., has paid the states and the federal government $7.5 million to settle similar allegations, of which Missouri will receive approximately $239,000. Missouri’s share of each settlement is based on utilization of the pharmaceuticals involved by the state’s Medicaid program. 

 

Specifically, these settlements resolve allegations that AstraZeneca and Cephalon underpaid drug rebates owed to the states.  Under a federal law known as the Medicaid Drug Rebate Program, drug manufacturers must periodically return a portion of the amount paid by state Medicaid programs for the manufacturers’ drugs.  The rebate program is designed to ensure that states pay competitive prices for drugs, and the rebates for a manufacturer’s drugs are calculated based on a percentage of the average prices drug wholesalers pay for each of the drugs.  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’s complaint alleged that AstraZeneca and Cephalon improperly treated certain fees paid to wholesalers as “discounts,” and that the effect of this accounting practice was to falsely decrease the AMP the companies reported to the federal government, improperly decreasing the rebates paid to the states.

 

“Huge pharmaceutical companies like AstraZeneca and Cephalon must not be allowed to extend their profits by withholding money they owe to the states,” Koster said.  “I am glad we are able to recover more than $630,000 for Missouri’s Medicaid program.”

 

Koster encourages individuals to report suspected Medicaid fraud to his office. State law provides that a whistleblower may be entitled to 10 percent of any Medicaid fraud money recovered as a result of their tip. Missourians can report suspected Medicaid provider fraud and abuse through the Attorney General’s Medicaid Fraud Hotline at 800-286-3932 or online at ago.mo.gov.