Tuesday, February 1, 2011

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Three-Week Trial Results in Jury Verdict Ordering Drug Maker To Pay Texas $170 Million In Damages For Fraud

AUSTIN – A Travis County jury today returned a record-setting verdict for damages, finding that drug manufacturer Actavis Mid-Atlantic, LLC misrepresented its drug prices to the taxpayer-funded Medicaid program. The jurors determined that Actavis and co-defendant Actavis Elizabeth, LLC should pay Texas and the federal government $170.3 million for defrauding Medicaid.
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Jury verdict in the charge of the court

Since 2000, the Texas Attorney General’s Civil Medicaid Fraud team has investigated multiple pharmaceutical manufacturers for their products’ prices to the Medicaid program. The State’s legal action against Actavis is one of those drug-pricing cases.

“Today’s verdict makes clear that the Texas Attorney General’s Office will hold Medicaid providers accountable for defrauding the taxpayers. I am grateful to the trial team for their hard work on this complex case,” Attorney General Greg Abbott said. “The verdict shows we will effectively use the legal system to retrieve any funds that pharmaceutical manufacturers and other providers improperly take from the Medicaid program.”

“The jury determined that the defendants owe $170 million because of improper drug price reporting,” Attorney General Abbott added. “Considering the hundreds of millions of dollars that are at stake, we will continue to vigilantly pursue providers that falsely report prices to Medicaid and defraud the taxpayers.”

The State’s legal action against Actavis stems from a whistleblower lawsuit that was filed under seal by a small Florida-based pharmacy called Ven-a-Care. The pharmacy owners pursued their claim after discovering Actavis reported artificially inflated prices to Medicaid for its drugs. Although the Attorney General’s Office has investigated multiple fraudulent drug pricing cases and successfully recovered hundreds of millions of dollars through pre-litigation settlements, the case against Actavis is the first to go to trial. Another manufacturer, Par Pharmaceuticals Inc. of New Jersey, is scheduled to face a separate state court action in May.

In late December, Mylan Laboratories Inc. agreed to pay damages totaling $65 million to the State and the U.S. government because it falsely reported inflated drug prices to the Medicaid program.

In order for pharmaceutical products to be eligible for reimbursement from Medicaid, Texas law requires that manufacturers accurately report market prices to the taxpayer-funded program. The Medicaid program uses this drug pricing information to determine the rates at which pharmacies are reimbursed for products.

Since 2000, the Office of the Attorney General has aggressively pursued Medicaid providers that reported false information to state health officials. Those legal actions ultimately led to settlements and recoveries from the following companies:

• Dey Inc., June 2003, $18.5 million
• Schering-Plough Corp., Warrick Pharmaceutical Corp., May 2004, $27 million
• Baxter Healthcare Corp., June 2006, $8.5 million
• Roxane Laboratories Inc., Boehringer-Ingelheim Pharmaceuticals, November 2005, $10 million
• GlaxoSmithKline, December 2007, $1.3 million
• Aventis, February 2008, $1.2 million
• Bristol Myers Squibb, July 2008, $37.4 million
• Abbott Laboratories Inc., September 2008, $28 million
• Alpha Therapeutic, August 2009, $1.2 million
• B. Braun Medical Inc., December 2009, $1.1 million
• Teva Pharmaceuticals Inc., July 2010, $51 million
• Mylan Laboratories, December 2010, $65 million

The following assistant attorneys general for the Civil Medicaid Fraud team participated in preparing this case for trial:

Raymond Winter, Margaret Moore, Mark Einfalt, Drew Wright, Celeste Kemper, Damon Ong, Matt Miller and Diane Jacobs.

Support staff included Carrie Killion, Rhonda Rodriguez and Diana Reed.