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Post date: March 23 2006

State Settlement With Pharmaceutical Company Ends Investigation Into Drug Pricing For State Medicaid Program N River

New York State Attorney General Spitzer announced today that 49 states, led by a state settlement team headed by an attorney from New York's Medicaid Fraud Control Unit ("MFCU"), joined with the federal government to conclude a national settlement with King Pharmaceuticals ("King") that will result in the recovery of $11.9 million for losses sustained by New York's Medicaid program and an additional $3 million to cover losses to New York programs that provided supplemental drug benefits to the elderly and others.

The civil agreements settle allegations that King, a Tennessee-headquartered manufacturer of generic drugs, failed to accurately report its average manufacturer price and its best price for certain pharmaceutical products. As a result, King underpaid Medicaid and other programs amounts that were due under the federal and state Medicaid Rebate Programs, which are designed to ensure that Medicaid receives the benefit of discounts that King made available to its commercial customers. In total, King will pay the federal government and the 49 states approximately $124 million and will enter into a corporate compliance agreement to monitor the company's operations and ensure future compliance with the law.

King also agreed to pay an additional $3 million for rebates it failed to pay to: New York's Elderly Prescription Insurance Corporation ("EPIC"), which provides low cost prescriptions to senior citizens; the New York State Home Relief Program, a former supplemental assistance program for low income New Yorkers; and the AIDS Drug Assistance Program, which provides free medications for the treatment of HIV/AIDS for New York State residents with HIV infection who are uninsured or under-insured.

Patrick Lupinetti, Director of MFCU's Special Projects Unit, served as leader of the state settlement team under the auspicies of the National Association of Medicaid Fraud Control Units. The MFCU Directors of Delaware, Florida and Missouri also served on the settlement team.