Texas sues three drug makers alleging Medicaid fraud

Jun 22 2007

Texas on Wednesday filed lawsuits against Mylan Laboratories, Sandoz, Teva Pharmaceuticals and subsidiaries of those companies alleging that the state Medicaid program overpaid retailers by at least tens of millions of dollars for medications because the companies did not disclose discounts they were providing to retailers, the Houston Chronicle reports.

The Texas Medicaid program set reimbursements for drug costs to retailers based on prices reported by drug makers.

State Attorney General Greg Abbott (R) said deep discounts the drug companies provided to retailers were not disclosed to the state.

According to Texas law, retailers are not responsible for the discrepancy because only drug makers are required to report the prices used to calculate reimbursements.

The lawsuit claims the "spread" between what retailers paid for the drugs and the amount they were reimbursed by Medicaid was intended to persuade retailers to buy from the drug companies.

The drug companies did not comment on the lawsuit (Fikac, Houston Chronicle, 6/20).