UPDATE: Pharmaceuticals Cos Settle Medicaid Claims For $124 Million
20 October 2009 - 6:53AM
Dow Jones News
Three pharmaceutical companies agreed to a $124 million
settlement to resolve claims they failed to pay rebates for some
state Medicaid programs, the U.S. Justice Department announced
Monday.
Mylan Inc. (MYL) paid a total of $118 million to settle
allegations that they underpaid rebates to Medicaid for several of
the company's drugs. The company also had to pay an additional $3
million for interest.
AstraZeneca PLC (AZN, AZN.LN) paid $2.6 million to settle
charges that it underpaid Medicaid rebates on Albuterol, while
Johnson & Johnson (JNJ) subsidiary Ortho-McNeil paid $3.4
million to settle claims that it underpaid Medicaid rebates for
Dermatop.
The case originated in a federal court in New Hampshire.
Under the Medicaid Prescription Drug Rebate Program, drug
companies pay quarterly rebates to Medicaid programs based on how
much money the programs paid for the companies' medicines.
The precise amount of the rebate is determined in part by
whether a drug is considered an "innovator" or a "non-innovator."
The Justice Department claims the settlement involved allegations
the companies classified "innovator" drugs as "non-innovator,"
which have a smaller rebate.
Mylan said in its statement that the settlement not only
resolves the dispute but includes no admission or finding of any
wrongdoing. The maker of generic drugs said that it will take a
third-quarter charge of $83 million for the deal.
AstraZeneca spokesman Tony Jewell said the company denied any
wrongdoing in the matter, "which involved disputed issues regarding
the proper classification of a drug under the Medicaid program. The
company cooperated fully in the government's investigation and
believes this settlement will avoid the burden and expense of
litigation."
Mylan's shares were down 0.8% to $16.54 in recent trading, while
AstraZeneca's American depositary shares were up 2.6% to $46.13 and
Johnson & Johnson rose 1.5% to $61.38 amid a broad market
rally.
-By Brent Kendall and John Kell, Dow Jones Newswires;
202-862-9222; brent.kendall@dowjones.com