As reported in Reuters, an Icelandic corporation with United States subsidiaries, Actavis Group, has settled a long and contentious Medicaid fraud case for $84 million. Texas filed suit against the corporation, claiming it inflated the price of generic drugs and billed the increased costs to Medicaid. The ruse caused Medicaid to significantly overpay pharmacies for the generic drugs. After a long trial, the jury found the corporation liable and ordered it to pay $170.3 million in damages. Actavis appealed that verdict. While the appeal was pending, both parties reached an agreement in which Actavis would pay $84 million to settle the claim. The terms of the settlement agreement provide that the parties pursue no further litigation.
Actavis did not admit to any wrongdoing as part of the settlement agreement and even thought that the settlement was a favorable outcome. The CEO of Actavis, Inc. had this to say: “Actavis will continue to report our product pricing in an [sic] manner consistent with all applicable laws as well as the terms of this agreement.” This case, like many other health care fraud cases, began as a whistleblower case and the state of Texas intervened in the suit. The whistleblowers will now receive a portion of the $84 million settlement.
Several states have false claims legislation similar to the federal False Claims Act and these states, like Texas, are using that legislation to keep a tight lid on Medicare and Medicaid fraud. The federal government is not the only one in the fight against health care fraud. States are also taking a stand. It seems like governments are beginning to realize that a possible solution to the perpetual budget deficits is to attempt to recover the millions paid out in false health care claims. Once governments begin to change the policy of pay now, ask questions later, there will be more money in the budget to satisfy the needs of that government’s constituents.
Texas and the lawyers in its Attorney General's office are doing a good job keeping these pharma companies honest, and, when they cross the line, holding them accountable.
Below is the settlement agreement.