U.S. Deputy Assistant Attorney General Benjamin Mizer said July 6 AstraZeneca and Cephalon will pay $46.5 million and $7.5 million respectfully, to resolve separate cases that claimed the drug companies underpaid rebates that were owed. | U.S. Department of Justice

Two drug manufacturers will pay millions to settle lawsuits with the federal government that accused both companies of underpaying rebates owed under the Medicaid Drug Rebate Program, said U.S. Deputy Assistant Attorney General Benjamin Mizer on July 6.

AstraZeneca will pay $46.5 million and Cephalon will pay $7.5 million to settle the separate cases, Mizer said. The United States will receive $26.7 million plus interest and about $19.8 million will go to the states. About $4.3 million plus interest will go to the federal government from Cephalon, and the remaining $3.2 million to the states.

“The Medicaid Drug Rebate Program relies on drug manufacturers reporting accurate pricing information used in the rebate calculations,” Mizer said. “These settlements demonstrate the Department of Justice’s commitment to ensuring that state Medicaid programs receive the full amount of rebates from manufacturers that Congress intended.”

The rebate program requires drug manufacturers to pay state Medicaid program quarterly rebates, and in return Medicaid covers the manufacturers' drugs. The rebate amounts are based partly on what is called the Average Manufacturer Prices, which is reported to the government by the manufacturers for each of the covered drugs. The lawsuits alleged AstraZeneca and Cephalon under reported the AMPs for several of their drugs.

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