$124 million settlement reached with Mylan Pharmaceuticals, UDL Laboratories, AstraZeneca and Ortho McNeil Pharmaceuticals

NEW YORK, N.Y. (October 19, 2009) - Attorney General Andrew M. Cuomo announced today that New York state has joined with other states and the federal government and reached an agreement with four pharmaceutical companies that will pay a total of $124 million to resolve claims that they violated the False Claims Act by failing to pay appropriate rebates for drugs that were paid for by Medicaid.

The portion of the settlement going to New York state is $18,364,742.69.

“Companies that do not properly honor their repayment obligations to our Medicaid programs are violating the law and end up increasing the burden on taxpayers,” said Attorney General Cuomo. “This settlement brings money that was underpaid by these companies back to New York state. I applaud our multi-state partners and the federal government with whom we worked together to make sure the Medicaid program is accurately reimbursed.”

Mylan Pharmaceuticals, Inc. (MPI), UDL Laboratories, Inc. (UDL), AstraZeneca Pharmaceuticals LP, and Ortho McNeil Pharmaceutical, Inc., are participants in the Medicaid Rebate Program and executed Rebate Agreements with the United States. The companies agreed to pay quarterly rebates to Medicaid that were based upon the amount of money that Medicaid paid for each company’s drugs.

The precise amount of a rebate is determined in part by whether a drug is considered an “innovator” drug or a “non-innovator” drug. The rebate for innovator drugs is higher than the rebate for non-innovator drugs. The participating states and the federal government found that the four companies sold innovator drugs that were manufactured by other companies and had classified those drugs as non-innovator drugs for Medicaid rebate purposes. As a result, the companies underpaid their rebate obligations to the Medicaid Program.

MPI and UDL must pay a combined $118 million to resolve allegations that they underpaid their rebate obligations with respect to several drugs. AstraZeneca must pay $2.6 million to resolve allegations that it underpaid its rebate obligations with respect to Albuterol and Ortho McNeil must $3.4 million regarding rebate allegations for Dermatop. From the total, $7,279,135 will be paid to entities that participated in the Public Health Service’s Drug Pricing Program.

The MPI drugs in question include: nifedipine extended release tablets, flecainide acetate, selegiline HCL, Orphenadrine Citrate Aspirin and Caffeine tablets, Triamterene/Hydrochlorothiazide, Propoxyphene HCL, Propoxyphene HCL/Aspirin/Caffeine, Prophyxphene Napsylate/Acetaminophen, Ibuprofen tablets, Bumetanide, Cepalexin and Cefactor. The UDL drugs include: nifedipine extended release tablets, selegiline HCL, Triamterene & HCTZ, Propox Naps & APAP, Flecainide Acetate, Trihexyphenidyl, Ranitidine HCL syrup, Sucralfate Suspension, Selegiline HCL and Bumetanide.

Earlier this year, Attorney General Cuomo’s Medicaid Fraud Control Unit was selected as the top Medicaid fraud control unit in the country by the Department of Health and Human Services’ Office of the Inspector General (HHS-OIG) for 2008. Last year, Attorney General Cuomo’s Medicaid Control Fraud Unit secured settlements and court orders requiring the payment of $263.5 million in civil damages and criminal restitution, surpassing the $113.8 million achieved in 2007 and $59.3 million in 2006.

A National Association of Medicaid Fraud Control Units team participated, on behalf of the settling states, in the negotiations with all four pharmaceutical companies that led to the settlement announced today. Team members included representatives from the Offices of the Attorneys General for the states of New York, New Hampshire and Ohio.