Pharmacia Corporation Overcharged State Health Care Providers Millions for Medication

Multimillion Dollar Medicaid Recovery Follows Schneiderman’s Initiative to Strengthen Medicaid Fraud Control Unit & Protect Taxpayers

NEW YORK – Attorney General Eric T. Schneiderman today announced a multimillion dollar settlement with a pharmaceutical company that inflated the cost of drugs sold to state health programs. The company, Pharmacia Corporation, has paid $2.5 million to the New York Medicaid program and to the Elderly Pharmaceutical Insurance Coverage Program (EPIC), and also to cover the costs of the investigation. The settlement follows Attorney General Schneiderman’s new initiatives to bolster his office’s Medicaid Fraud Control Unit (MFCU) and create a Taxpayer Protection Unit to increase fraud recoveries during a period of fiscal crisis.

“New York’s taxpayers will no longer foot the bill when contractors inflate their prices to make an extra buck,” Attorney General Schneiderman said. “These are hard financial times for our state, and my office will do its part by uncovering every dishonestly claimed dollar, and holding those who take advantage of New York accountable.”

According to the Attorney General’s complaint, Pharmacia Corporation inflated the average wholesale price of the medications it produced. Government health plans, like Medicare, Medicaid, and EPIC, base reimbursement rates on the wholesale prices that Pharmacia calculated.

The lawsuit, filed in 2003, charged that Pharmacia failed to report real and accurate prices, and did not take into account discounts, rebates, chargebacks and other price concessions to their wholesalers. As a result, New York’s Medicaid Program and the EPIC program paid more for certain drugs manufactured by Pharmacia than those state programs should have. Pharmacia has paid $2.45 million to the state Medicaid Program and EPIC, and reimbursed the state $50,000 for the costs of the investigation.

Last month, the Attorney General announced a one-two punch approach to cracking down on money stolen from New York taxpayers and state government. The initiative enhances MFCU by adding dozens of new prosecutors, investigators and auditors to crack down on Medicaid fraud and abuse; and establishes a Taxpayer Protection Unit (TPU). The TPU makes use of the Fraud Enforcement and Recovery Act, which Schneiderman authored, to root out large-scale, multi-state corporate tax fraud schemes, effectively prosecute corrupt contractors, and recover millions of wasted taxpayer dollars.

This case was litigated jointly by Jay Speers, Director of the MFCU Special Projects Unit, and Carol Hunt, Assistant Attorney General in the Health Care Bureau, under the supervision of Deputy Attorney General of MFCU Monica Hickey-Martin.