State Joins National Settlement with AstraZeneca

 Pharmaceuticals, LP and Cephalon, Inc. to Resolve

Overcharging Allegations

AstraZeneca Pays $36.5 Million, Cephalon $7.5 Million in

Nationwide Settlement

Attorney General George Jepsen, Chief State’s Attorney Kevin T. Kane and state Department of Social Services (DSS) Commissioner Roderick L. Bremby announced today that Connecticut has joined a federal-state settlement with AstraZeneca Pharmaceuticals, LP and Cephalon, Inc. to resolve allegations that the companies inappropriately overcharged state Medicaid programs for drugs. AstraZeneca, a London and Delaware-based pharmaceutical manufacturer, has paid the states and the federal government $46.5 million to resolve allegations against the company.  Cephalon, a Pennsylvania-based subsidiary of Teva Pharmaceuticals Industries, Ltd., has paid the states and the federal government $7.5 million to settle similar allegations. 

The states alleged that AstraZeneca and Cephalon underpaid drug rebates that were owed to the states. Under a federal law known as the Medicaid Drug Rebate Programs, drug manufacturers must periodically return a portion of the amount paid by Medicaid programs for manufacturers’ drugs. The purpose of the rebate program is to help ensure that states pay competitive prices for drugs, while the rebates are calculated based on a percentage of the average price drug wholesalers pay for each drug. This average price, which the manufacturer reports to the federal government, is known as the Average Manufacturer’s Price or “AMP”.  The greater the AMP reported by the manufacturer, the greater the rebate the manufacturer must pay for that drug. 

The companies were alleged to have improperly treated certain fees paid to wholesalers as “discounts.” The effect of this accounting practice was to falsely decrease the AMP the companies reported to the federal government, improperly decreasing the rebates paid to the states.

The portion of the settlement attributable to the state and federal shares of Connecticut’s Medicaid program from AstraZeneca is $389,125.06, of which the state share is $180,149.79; plus an additional $20,000.00 for state-only. As for Cephalon, they will be responsible for $188,450.34 attributable to CT Medicaid, of which the state share is $95,343.31; plus an additional $25,930.36 for state-only

“Overcharging our Medicaid program will not be tolerated,” said Attorney General Jepsen. “We take allegations of abuse very seriously, and we will continue to work to hold accountable those who seek to withhold rebates owed to states. I thank the Chief State’s Attorney and the Department of Social Services for their continued partnership in these matters.”

Chief State’s Attorney Kevin T. Kane expressed his appreciation to the Medicaid Fraud Unit in the Office of the Chief State’s Attorney, the Office of the Attorney General and the Department of Social Services for their continued collaboration to protect the integrity of the Medicaid program. “With limited resources available to help those who are truly in need, it is critical that we get the most from each tax dollar,” Kane said. 

DSS Commissioner Roderick L. Bremby said, “Connecticut’s participation in this national settlement once again underscores the fact that government must be zealous in protecting the integrity of taxpayer-funded health coverage.  Safeguarding the Medicaid drug rebate area is crucial in mitigating significant cost to the program.  The Department of Social Services greatly values our partnership with the Attorney General’s Office, Chief State’s Attorney’s Office and federal agencies in vigorously addressing the kind of financial abuse represented by this settlement and many other actions over the years.”

Anyone with knowledge of suspected fraud or abuse in the healthcare system is asked to contact the Medicaid Fraud Control Unit in the Office of the Chief State’s Attorney at 860-258-5986 or by email at conndcj@ct.gov; the Attorney General’s Antitrust and Government Program Fraud Department at 860-808-5040 or by email at ag.fraud@ct.gov; or the DSS fraud reporting hotline at 1-800-842-2155 or by email at providerfraud.dss@ct.gov.

Please click here to view the settlement documents.

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