Health

AstraZeneca, Teva Reach Deal With States In Medicaid Pricing Case

An AstraZeneca sign. Photo by REUTERS/Phil Noble

Drugmakers AstraZeneca Plc and Cephalon, a unit of Teva Pharmaceutical Industries Ltd, reached a multistate accord on Nov. 4 over civil charges they overbilled state Medicaid programs, the New York Attorney General announced.

The settlement with the states comes after the U.S. Justice Department settled parallel civil charges with both companies in July.

The $54 million to be collectively paid was previously announced by the Justice Department. Of that amount, AstraZeneca is responsible for $46.5 million and Cephalon for $7.5 million.

New York Attorney General Eric Schneiderman said on Nov. 4 the New York State Medicaid Program will collect nearly $7.5 million from AstraZeneca and a little more than $996,000 from Cephalon as part of the deal.

“Many New Yorkers rely on Medicaid for essential health care services, and when companies overcharge Medicaid, it harms taxpayers and patients alike,” he said in a statement.

Drug manufacturers are required to pay quarterly rebates to state Medicaid programs that provide coverage for the cost of the drugs. The rebates are based on the average manufacturer's price.

Higher average prices generally translate into higher rebates.

The federal government and the states alleged AstraZeneca and Cephalon treated certain fees to wholesalers as "discounts," effectively discounting the average manufacturer's price reported to the government and thereby lowering the rebates they were required to pay.

The settlement with AstraZeneca covered all 50 states, while Cephalon covered most states.

The case was triggered by Ronald Streck, a whistleblower who filed complaints in the U.S. District Court for the Eastern District of Pennsylvania.

(Reporting by Sarah N. Lynch in Washington; Editing by Eric Walsh and Jeffrey Benkoe)

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