Jury orders drug company Actavis to pay $170 million in Medicaid fraud case

In what state officials describe as a record-setting verdict, a Travis County jury found Tuesday that a global drug manufacturer misrepresented prices to the state's Medicaid program and said the company should pay the state and federal government $170.3 million.

The verdict concluded a nearly three-week trial in state district court, where lawyers for the Texas attorney general's office argued that Actavis Mid-Atlantic LLC and co-defendant Actavis Elizabeth LLC artificially inflated the costs of medications to obtain more money. Medicaid reimbursed pharmacies at higher rates because of the falsely reported prices, officials said.

The trial reportedly was the first of its kind in Texas; similar cases in recent years have settled out of court.

Attorney General Greg Abbott said in a statement that the case makes clear his office will hold accountable those who defraud the Medicaid program, a joint federal and state effort to provide health coverage to needy Texans.

"Considering the hundreds of millions of dollars that are at stake, we will continue to vigilantly pursue providers that falsely report prices to Medicaid and defraud the taxpayers," Abbott said.

Actavis officials said in a statement that they are disappointed by the verdict and "are exploring our legal options."

"Actavis remains, as always, committed to offering high-quality, lower-cost alternatives for health consumers, including the millions of Americans who participate in the Medicaid program," said John LaRocca, the company's vice president and chief legal officer.

Tuesday's verdict stemmed from a sealed whistle-blower lawsuit — filed in 2000 by a pharmacy, Ven-a-Care of the Florida Keys — that accused a number of drugmakers of reporting inflated drug prices to the Texas Medicaid program.

Texas joined the lawsuit in 2000 and reached settlements with 11 companies, settling for more than $139 million.

In 2008, the state increased pressure on Actavis and three other drugmakers — and began to discuss settlements or possible trials.

Actavis was the first to proceed to court. Teva Pharmaceuticals settled in July for $51 million. Par Pharmaceuticals is set for a May trial, and action is still pending against Watson Pharmaceuticals.

Teva and Par are based in New Jersey; Watson is in California.

According to the Texas lawsuit, the drugmakers schemed to increase sales by reporting inflated drug prices to the state Medicaid program.

Pharmacies and wholesalers who purchased the corporations' drugs could bill Texas for the inflated price, realizing "windfall profits" that also were bolstered by kickbacks, rebates and false price markups from the drugmakers, the lawsuit said.

Abbott said in his statement that he has been working for years to protect the Medicaid program, which costs the state billions each year.

tplohetski@statesman.com; 445-3605

via statesman.com

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