Texas Attorney General Greg Abbott announced on Thursday a $39.75 million settlement to resolve allegations of Medicaid fraud against generic drug manufacturer Ranbaxy Pharmaceuticals Inc., Ranbaxy Laboratories Inc., Ranbaxy USA Inc. and Ranbaxy Inc.
Ranbaxy is required to pay the state $17.875 million toward the state's general revenue fund to support Medicaid. The federal government will also receive $17.875 million.
An investigation was launched against Ranbaxy following allegations of Medicaid Fraud. The company was accused of reporting grossly inflated drug rates to the Medicaid program. The investigation found that the company had been violating state laws since 1997 resulting in the company receiving higher reimbursement for medications from Medicaid.
According to state law, drug manufacturers are required to disclose prices charged to pharmacies, wholesalers and distributors to the Medicaid program. When a company reports falsely inflated rates, the result is a higher payment from the state and federal program. Ranbaxy was also accused of offering lower rates to pharmacies and providers to encourage sales of its products.
Since investigations of such practices began in 2002, the Civil Medicaid Fraud Division has recovered over $1.5 billion.