Attorney General Abbott Recovers $19.5 Million for State of Texas, U.S.

Office of the Attorney General
Monday, August 11, 2014 - 11:40am

Texas Attorney General Greg Abbott secured a $19.5 million agreement with Taro Pharmaceuticals USA, Inc.

The agreement resolves the State’s civil Medicaid fraud investigation against Taro for fraudulently reporting inflated drug prices to the Medicaid program.

Under the settlement agreement, Taro must pay the State of Texas a total of $8.75 million for the State’s general revenue fund. Because the Medicaid program is jointly funded by the State and U.S. taxpayers, the federal government is entitled to a percentage of the settlement proceeds.

Since 2000, the Texas Attorney General’s Civil Medicaid Fraud team has investigated dozens of pharmaceutical manufacturers for reporting inflated drug prices to the Medicaid program.

The State’s investigation against Taro found that for 11 years, Taro violated Texas law when it misreported the prices of various drugs to the Medicaid program.

As a result, Medicaid reimbursed pharmacies more than it should have for certain of the companies’ products.

Under state law, drug manufacturers must file reports with the Medicaid program that disclose the prices they charge pharmacies, wholesalers and distributors for their products.

When manufacturers improperly report inflated market prices for their drugs, Medicaid reimburses pharmacies at vastly inflated rates.

The difference between the reimbursement amount and the actual market price is referred to as the “spread.”

The Office of the Attorney General accused Taro of using its illegally created spreads to unlawfully induce pharmacies and other providers to purchase Taro’s products.
Since 2002, the Civil Medicaid Fraud Division’s recoveries for the State of Texas have surpassed the $500 million mark – while total recoveries for the state and federal governments now exceed $1.46 billion.

To obtain more information about the Office of the Attorney General’s efforts to fight Medicaid fraud, access the agency’s website at www.texasattorneygeneral.gov.

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