October 20, 2009 -Four drug companies — Mylan Pharmaceuticals, UDL Laboratories, AstraZeneca Pharmaceuticals and Ortho McNeil — have settled allegations that they underpaid rebates to the Medicaid program by falsely designating so-called “innovator” drugs as “non-innovator” drugs.
And as they have in several high-profile settlements as of late, 340B-covered entities are getting a share of the recovery.
The rebate due on innovator drugs are higher than on non-innovator drugs, and by misclassifying their medications, the drug makers violated the False Claims Act, federal prosecutors said.
The $124-million settlement is the latest in a string of False Claims cases the U.S. Department of Justice has brought against drug makers in recent years, and prosecutors suggested it wouldn’t be the last one.
We “will continue to work with our state partners to ensure that Medicaid programs, which provide health care to more than 58 million Americans, receives the same discounts that any larger insurer gets,” said Tony West, assistant attorney general for the Justice Department’s Civil Division when announcing the settlement Monday. “These cases…demonstrate our commitment to protecting our most needy citizens.”
The bulk of the recovery for 340B providers will come from the settlements with Mylan and UDL, which will send out checks within the next month. They must also produce a report within the next 180 days detailing which providers were refunded and for how much.
In all, Mylan and its subsidiary UDL agreed to pay $118 million to settle allegations that they paid the wrong rebate amounts for a number of Mylan drugs, with nearly $61 million going to the federal government and nearly $50 million to the states.
The company that blew the whistle on Mylan, Florida-based Ven-A-Care, receives nearly $10.8 million as its share of the recovery.
Mylan, a generic drug maker, said in a press release that it would seek to recoup a “substantial portion” of its settlement amount from any pharmaceutical company that received overpayments from adjusted net sales during the four-year period.
The dispute centered around whether the company’s authorized generics were subject to the generic rate that Mylan paid during the period, or to a higher innovator rate.
AstraZeneca will pay $2.6 million to resolve allegations that it underpaid rebates for Albuterol, a respiratory drug. Ortho McNeil will pay $3.4 million settle similar allegations over sales of a steroid cream, Dermatop.
There does not appear to be a 340B refund included in those two settlements.