AUSTIN, Texas (Legal Newsline) – Texas Attorney General Greg Abbott reached a $19.5 million agreement on Monday with Taro Pharmaceuticals USA Inc. to resolve allegations of Medicaid fraud.
Taro allegedly engaged in the fraudulent reporting of inflated drug prices to the Medicaid program. The pharmaceutical company allegedly violated state law when it misreported the prices of multiple drugs to the Medicaid program over an 11-year period. The alleged misreporting caused Medicaid to reimburse pharmacies more than it should have for certain products.
State law requires drug manufacturers to file reports with the Medicaid program to disclose prices they charge wholesalers, pharmacies and distributors for their products. If a manufacturer improperly reports inflated market prices for a drug, Medicaid may reimburse pharmacies at significantly inflated rates. The difference between the actual market price and the reimbursement amount is called the “spread.”
Abbott’s office alleged Taro used its unlawfully created spread to illegally induce pharmacies and other providers to buy Taro’s products.
Under the terms of the settlement, Taro must pay the state $8.75 million for its general revenue fund. Since Medicaid is jointly funded by federal and state taxpayers, the federal government is entitled to part of the proceeds from the $19.5 million settlement.
Since 2002, Abbott’s Civil Medicaid Fraud Division has recovered more than $500 million. Total recoveries for the federal and state governments are more than $1.46 billion.