Bryan Cohen Jan. 9, 2014, 3:33pm

AUSTIN, Texas (Legal Newsline) - Texas Attorney General Greg Abbott announced a $25 million settlement on Tuesday with a New York-based pharmaceutical manufacturer to resolve allegations the company reported inflated drug prices to the state Medicaid program.

Hi-Tech Pharmacal Inc. allegedly misreported the prices of multiple generic drugs to the Medicaid program. Texas law requires drug manufacturers to file reports with the Medicaid program that disclose the prices they charge distributors, wholesalers and pharmacies for their products. If a manufacturer improperly reports inflated market prices for the drugs, Medicaid reimburses pharmacies at significantly inflated rates.

Abbott alleged Hi-Tech's inflated prices caused the Texas Medicaid program to be overcharged for certain products manufactured by Hi-Tech.

Under the terms of the settlement, Hi-Tech must pay $25 million to resolve the allegations of Medicaid fraud. Because Medicaid is jointly funded by the federal and state government, the federal government is entitled to a portion of the settlement funds. The state will receive approximately $11.2 million of the settlement proceeds, in addition to attorney and court costs.

Since 2002, Abbott's Civil Medicaid Fraud Division recovered more than $400 million worth of funds wrongfully taken from the Medicaid program for the state through civil enforcement actions and more than $1 billion for the federal government.

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