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AstraZeneca Agrees to Settle Lawsuit over Medicaid Drug Rebate Program for $46.5M

Jul 10, 2015

AstraZeneca has agreed to a $46.5 million settlement (plus interest) to resolve allegations that it underpaid rebates owed under Medicaid, The News Journal reports. The allegations stem from a whistleblower lawsuit filed in 2008 alleging that the company lowered rebates they paid to the Medicaid Drug Rebate Program by falsely reporting prices. Originally, the whistleblower's allegations involved 30 pharmaceutical companies; the number of defendants was eventually lowered to four.

In exchange for Medicaid drug coverage, drugmakers are required to pay quarterly rebates under the program. These amounts are at least partially based on the average manufacturer prices reported by pharmaceutical companies to the federal government. Allegedly, AstraZeneca caused the government to be overcharged by undereporting for some of their drugs. According to federal prosecutors, the company improperly treated fees they paid to wholesalers as price reductions, The News Journal reports. Cephalon, Biogen Inc. and Genzyme Corporation faced the same allegations.

Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department's Civil Division, stated of the case "The Medicaid Drug Rebate Program relies on drug manufacturers reporting accurate pricing information used in the rebate calculations," according to The News Journal. "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 News Journal reports that the U.S. government will receive $26.7 million in the settlement while 24 states and the District of Columbia will split $19.8 million. In a separate settlement related to the same case, Cephalon agreed to pay $7.5 million. Biogen has also reached a settlement in the past. AstraZeneca settled without admitting liability.

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