Texas Jury Issues $170M Verdict Against Drug Maker for Inflating Prices

A Texas jury has ruled that Actavis must pay $170 million for defrauding Medicaid by artificially inflating drug prices. 

The Actavis Medicaid fraud lawsuit was one of a number of claims brought by Texas and the federal government against drug manufacturers in 2008. The Actavis lawsuit is the first to go to trial. Most of the other cases were settled out of court for substantially less than the February 1 jury verdict.

The verdict is the result of a whistleblower lawsuit brought against the companies by a Florida-based pharmacy called Ven-a-Care, which reported that they discovered Actavis was reporting inflated drug prices to Medicaid programs. It comes a little more than a month after Mylan Laboratories agreed to settle similar charges out of court for $65 million.

“Today’s verdict makes clear that the Texas Attorney General’s Office will hold Medicaid providers accountable for defrauding the taxpayers,” Texas Attorney General Greg Abbott said in a press release. “The verdict shows we will effectively use the legal system to retrieve any funds that pharmaceutical manufacturers and other providers improperly take from the Medicaid program.”

Most of the fraud lawsuits involve generic drugs which Texas investigators say were sold at a discounted price to buyers as part of a bulk “spread” and were then reported to Medicaid at full price, according to the 2008 lawsuit (pdf).

In addition to the Mylan settlement, Teva Pharmaceuticals also reached a settlement with state and federal prosecutors last year. In July, the company agreed to pay $51 million to settle the Medicaid fraud claims. Since 2008, Texas has also reached settlements with Aventis, Bristol Myers Squibb, Abbott Laboratories, Alpha Therapeutic and B. Braun Medical Inc. in whistleblower lawsuit claims of overcharging Medicaid.

The next trial is scheduled for May in Texas state court involving similar claims against Par Pharmaceuticals.