King Pharmaceutical, Inc. settles for $124 million in national Medicaid fraud case

Tacoma – Attorney General Rob McKenna announced today that the Attorney General’s Medicaid Fraud Control Unit (MFCU) reached agreement with a pharmaceutical company that incorrectly reported prices to the government for several of its drugs and paid millions of dollars less in rebates to government entities, including state Medicaid programs.

King Pharmaceutical, Inc., a Tennessee-headquartered manufacturer of generic drugs, will pay $124 million in settlements to 49 states and the federal government. The company entered into civil agreements to address allegations that, from 1994 through 2002, it did not accurately calculate drug prices reported to the federal government for the purpose of establishing rebates due to state Medicaid programs under the federal Medicaid drug rebate program.

As a result of these incorrect price calculations, Medicaid and other programs that were due rebates from King Pharmaceuticals were underpaid some $62 million nationwide. The settlements include a double damages penalty, resulting in the total settlement figure of $124 million.

As part of the settlement, Washington will recover $778,541.08 for the Washington State Medicaid Program– of that, $411,316.04 will be paid directly to the state of Washington and the balance will go to the federal government to reimburse its share of the Medicaid costs.

King will pay additional monies to approximately 60 Washington state hospitals and clinics based upon its false reports. Some of these monies will in turn be repaid by those entities to Washington’s Medicaid Program.

The civil settlements with King Pharmaceuticals further required the company to enter into a Corporate Integrity Agreement with the Office of the Inspector General of the United States Department of Health and Human Services, in order to monitor the company’s operations and ensure compliance with the law in the future.

The Washington Attorney General’s Office Medicaid Fraud Control Unit recovered more than $9 million for Washington state last year through the unit’s investigation and prosecution of fraudulent providers.

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For interviews, contact Senior Counsel David W. Waterbury at the Attorney General’s Office, Medicaid Fraud Control Unit, (253) 593-2154

Contact:

Janelle Guthrie, AG Media Relations Director, (360) 586-0725