MADSION, Wis. (Legal Newsline) - Wisconsin Attorney General J.B. Van Hollen has reached a $4.2 million settlement agreement with three of the 36 pharmaceutical manufacturers charged with defrauding the state's Medicaid Program.
The pending law enforcement action filed by the state's Department of Justice in Dane County alleges that the companies reported fictitious prices to deceive Medicaid's pharmaceutical reimbursement system to increase market share and sales.
Under the terms of the agreement, which was announced Monday, Warrick Pharmaceuticals Corporation, Schering Corporation and Merck & Company Inc., will pay a total of $4.25 million to settle the state's claims.
The payment is comprised of $3.7 million in restitution to the Medicaid Program and $550,000 in costs and fees for the action's prosecution.
Van Hollen said it is unlawful under Wisconsin law for any person to make representations that are misleading, untrue or deceptive with intent to sell pharmaceuticals.
The suit alleged that the pharmaceutical manufacturers caused false average wholesale prices to be published by First DataBank with the knowledge that the state would rely on this information to set reimbursement formulas.
This resulted in a much higher payment than the actual cost of the drug and the Wisconsin Medicaid program reimbursing more for drugs than it would have if the correct AWPs had been reported, Van Hollen says.
The original complaint was filed in 2004 in Dane County Circuit Court.