ATTORNEY GENERAL JOHN CORNYN
$79 Million Medicaid Fraud Lawsuit
The State of Texas
Dey, Inc., Roxane Laboratories, Inc.,
- Texas Attorney General John Cornyn is suing for the recovery of over $20
million in Medicaid overpayments as well as damages and penalties for a total
of approximately $79 million.
- The defendant drug companies violated Texas law in falsely reporting inflated
drug prices to Texas Medicaid. These false statements and representations
have caused Texas Medicaid to overpay pharmacies for their drugs.
- The defendants intentionally reported these inflated prices in order to increase
the "spread," or profit margin, on their drugs. A higher "spread" makes that
drug more profitable for the pharmacy, making it more likely that the
pharmacies will buy that particular drug.
- In essence, the defendants have used the "spread" to capture or increase the
market share for their drugs. An increased market share for the manufacturer
means increased profits.
- The drugs involved are prescription medications used for treatment of
respiratory diseases primarily albuterol sulfate (sold by Dey and Warrick) and
ipratroprium bromide (sold by Roxane).
Background on the Texas Medicaid Vendor Drug Program
The Texas Medicaid Fraud Prevention Act
- Found in chapter 36 of the Texas Human Resources Code. The Act specifies
10 separate acts which are declared to be unlawful, including:
Knowingly or intentionally:
- making a false statement or misrepresentation of material fact on an
application for a benefit or for payment under the Medicaid program;
- concealing or failing to disclose an event which permits a greater
Medicaid payment than is authorized; and
- making a false statement or misrepresentation of fact concerning
information required to be provided by a federal or state law, rule,
regulation or provider agreement pertaining to the Medicaid program.
- The Act authorizes the Texas Attorney General to sue for:
- two times the amount of the restitution;
- penalties of $1,000 to $10,000 per unlawful act; and
- interest, costs, and attorneys' fees.