Settlement reached in Texas over improperly priced pharmaceuticals‏

Nick Rees Aug. 13, 2009, 5:19pm

Greg Abbott (R)

AUSTIN, Texas (Legal Newsline) – The Texas attorney general has reached a settlement agreement with a pharmaceutical manufacturer over improper prices on several drugs marketed by the company.

Alpha Therapeutic Corp. agreed to the $1.2 million settlement to resolve a state investigation into improperly reported product prices from the mid-1990s.

The enforcement action against Alpha Therapeutic followed a sealed whistleblower lawsuit filed by Ven-A-Care of the Florida Keys Inc., a home-infusion pharmacy. Similar information from Ven-A-Care lead to Texas Attorney General Greg Abbott taking action against other defendants with similar drug-pricing schemes.

Alpha Therapeutic marketed the drugs Alphanate, Alphanine, Profilnine and Venoglobulin that were dispensed to Medicaid patients that, during the mid-1990s, state investigators discovered, had improperly reported product prices. As a result of the improper product prices, Alpha Therapeutic guaranteed profits for its retail pharmacy customers at the taxpayer-funded Medicaid program's expense.

Drug manufacturers are required by state and federal law to report the sale price of their products to providers including pharmacies, wholesalers and distributors. The reported prices are then used by the Texas Medicaid program in estimations of the cost Medicaid providers pay to purchase the manufacturers' products.

Providers of Medicaid then bill the program, run by the state, for these estimated costs as well as for prescription dispensing fees. Medicaid then reimburses the providers. Because of Alpha Therapeutics' inflated price reporting to Medicaid, providers were vastly overpaid for the products.

The profits created by the inflated reimbursements created a system wherein providers were induced to favor Alpha Therapeutic over other manufacturers, causing a long-term, unlawful market niche for the company.

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