BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced Monday that her office has reached a $2.6 million settlement with a drug manufacturer that allegedly violated the state's False Claims Act.

Mylan, Inc., a Canonsburg, Penn.-based pharmaceutical manufacturer, through its wholly-owned subsidiary, Mylan Pharmaceuticals Inc., allegedly reported false and inflated prices to drug industry price reporting services.

These incorrect numbers caused the Massachusetts Medicaid Program to pay inflated totals for ingredient costs on Medicaid prescriptions, Coakley claims.

"The Massachusetts Medicaid Program provides vital health care services to thousands of poor, elderly and disabled Massachusetts residents," Coakley said.

"This settlement is a step forward in our efforts to correct false price reporting. Our office will continue to work with MassHealth and the federal government to maintain the integrity of the pharmaceutical reimbursement program and ensure that it is fair to all parties."

In addition to Mylan, Massachusetts sued 12 other generic drug manufacturers in 2003 for allegedly falsely inflating the prices they reported to national pharmaceutical price reporting services.

Mylan did not admit any wrongdoing in the settlement, which resolves the Commonwealth's claims related to drugs that Mylan manufactured and sold from 1998-2003. Those drugs included Clozapine, Phenytoin Sodium and Lorazapam.

All of the money recovered in the settlement will be returned to MassHealth, the Massachusetts Medicaid Program.

Almost all Medicaid programs nationwide and thousands of private health insurance plans rely on prices reported by pharmaceutical manufacturers to national price reporting services to determine what they will pay to pharmacies for ingredient costs in connection with prescription drugs.

Massachusetts alleged that through the reporting the false and inflated prices by these companies, the Medicaid Program paid inflated amounts for ingredient costs for prescriptions for Medicaid recipients.

The Commonwealth had previously settled with 10 other defendants in this case, recovering a total of $20.3 million.

The other settlements were with Dey Inc.; Barr Laboratories Inc.; Duramed Pharmaceuticals Inc; Ethex Corporation; Roxane Laboratories Inc.; Teva Pharmaceuticals USA Inc.; Ivax Corporation; Watson Pharma Inc., formerly known as Schein Pharmaceutical Inc.; Watson Pharmaceuticals Inc.; and Actavis Elizabeth LLC, formerly known as Purepac Pharmaceutical Co.

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