Ken Paxton

Friday, January 4, 2013

Attorney General Abbott Recovers $36.34 Million for State of Texas, U.S.

AUSTIN Texas Attorney General Greg Abbott today announced that two civil Medicaid fraud settlements secured by the Attorney General’s Office will yield more than $36 million for the State of Texas. The settlement agreements announced today resolve the State’s Medicaid fraud claims against Pfizer Inc. and Endo Pharmaceuticals.

Under the agreements, the State of Texas will recover $18.17 million each from Pfizer and Endo Pharmaceuticals. The combined $36.34 million recovery for the State is in addition to attorney fees and relator shares that will also be assessed against the defendants. Because Medicaid is jointly funded by the State and the federal government, the federal government is entitled to a share of the total monetary settlement.

The State charged Pfizer and Endo with defrauding the Medicaid program in previously sealed cases. The State’s enforcement actions cited both defendants for misreporting the price of various generic drugs to the Medicaid program. As a result, the taxpayer-funded program was overcharged for certain Pfizer and Endo products. In the Pfizer settlement, the State’s investigation initially targeted Pharmacia, Lederle, ESI Lederle and related entities, which are now wholly owned by Pfizer.

Under state and federal 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’s enforcement action charged both defendants with using their illegally created spreads to unlawfully induce pharmacies and other providers to purchase the defendants’ products.

The defendants’ improper price reporting was first identified by Ven-A-Care of the Florida Keys Inc., a pharmacy that subsequently filed a whistleblower lawsuit pursuant to the Texas Medicaid Fraud Prevention Act. The State of Texas intervened in the case to recover fraudulent overpayments made by the Medicaid program to pharmacies based on the prices reported by Pfizer and Endo. Under the act, Ven-A-Care is entitled to a share of the overall recovery.

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