AUSTIN, Texas (Legal Newsline) - Texas Attorney General Greg Abbott reached a $10 million agreement on Tuesday with a New Jersey-based pharmaceutical company to resolve allegations the company fraudulently reported inflated drug prices to the Texas Medicaid program.
West-Ward Pharmaceuticals Corp. allegedly misreported the prices of various drugs to the Medicaid program for close to a decade. West-Ward allegedly received higher reimbursements than it should have for its products as a result.
State law requires that drug manufacturers file reports with the Medicaid program that disclose the prices they charge distributors, wholesalers and pharmacies for their products. If inflated prices are reported, Medicaid ends up reimbursing pharmacies at significantly inflated rates.
The difference between the reimbursement amount and actual market price is called the spread. Abbott's office alleged West-Ward used its illegally created spreads to induce pharmacies and other providers to buy its products.
Under the terms of the settlement, West-Ward must pay the state a total of $4.5 million for the Texas general revenue fund. Because the Medicaid program is jointly funded by U.S. taxpayers and the state, the federal government is entitled to a percentage of the settlement proceeds.
Abbott's Civil Medicaid Fraud Division secured $470 million in recoveries for the state since 2002. Total recoveries for the state and federal government exceeded $1.3 billion with Tuesday's settlement.