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SALT LAKE CITY (AP) -- Utah has received more than $147,000 in a settlement with a major pharmaceutical company that cheated the state's Medicaid program.
Wade Farraway, director of the state attorney general's Medicaid fraud unit, said the award was part of an $88 million settlement recently made final with GlaxoSmithKline, which agreed in April that it had failed to report "best price" information on the nasal spray Flonase and the antidepressant Paxil.
Also in April, the drug company Bayer agreed to plead guilty to violating the Federal Prescription Drug Marketing Act, pay a criminal fine of $5.6 million for alleged overcharges involving its antibiotic Cipro and its high blood pressure drug Adalat, and pay nearly $252 million in civil penalties.
The Glaxo and Bayer settlements money is being shared by the federal government, the District of Columbia and every state except Arizona.
Utah's total share of the GlaxoSmithKline settlement was nearly $460,000. But because Medicaid is a federal-match program, 75 percent of the total had to go back to the federal government.
Farraway said he expected Utah to net at least $200,000 when the Bayer money is paid out.
Medicaid is the federal and state health care insurance program that provides health care coverage for the economically disadvantaged. Medicaid expenditures nationwide have been rising steeply in recent years, partly because of increases in prescription drug costs.
Companies that participate in Medicaid must offer the government the lowest price available to other customers. If a company charges anyone less than the government, it must pay Medicaid a rebate.
Federal prosecutors said Bayer and GlaxoSmithKline used a "lick and stick scheme," offering drugs at discount prices to Kaiser Permanente, the nation's largest health maintenance organization.
The discounts were not reported and difficult to track because Kaiser was allowed to put different labels on the drugs it was giving to its customers, prosecutors said. The scheme allowed the two drug companies to avoid paying millions of dollars in Medicaid rebates.
GlaxoSmithKline, unlike Bayer, was not accused of any criminal wrongdoing.
The settlement comes amid numerous investigations into drug companies by state and federal prosecutors across the country.
TAP Pharmaceutical Products Inc., Pfizer Corp. and Bristol-Myers Squibb have reached separate agreements to settle multimillion-dollar complaints. Attorneys general from 47 states are currently investigating whether Pfizer illegally marketed the epilepsy drug Neurontin.
(Copyright 2003 by The Associated Press. All Rights Reserved.)
