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    Rutledge Holds Two Companies Accountable for Theft from the Arkansas Medicaid Program

    November 5, 2015

    LITTLE ROCK – Arkansas Attorney General Leslie Rutledge today announced that Arkansas has joined with other States and the federal government to settle allegations that AstraZeneca Pharmaceuticals LP and Cephalon Inc. overcharged State Medicaid programs, including Arkansas, for medications.

    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.

    “These companies stole money that was rightly owed to the Arkansas Medicaid program through the Medicaid Drug Rebate Program,” said Attorney General Rutledge. “The fraud committed caused the State Medicaid programs to overpay for drugs. These actions were inappropriate, and today these companies are being held accountable for their deceit.”

    As part of the settlement, Arkansas will receive almost $134,000 in restitution and other recovery.

    These settlements resolve allegations that AstraZeneca and Cephalon underpaid drug rebates owed to the States. Under a federal law, drug manufacturers must periodically return a portion of the amount paid by State Medicaid programs for the manufacturers’ drugs. The rebate program is designed to ensure that States pay competitive prices for drugs, and the rebates for a manufacturer’s drugs are calculated based on a percentage of the average prices drug wholesalers pay. The greater the average price reported by the manufacturer, the greater the rebate the manufacturer must pay for that drug.

    The investigation resulted from action filed in the United States District Court for the Eastern District of Pennsylvania under the federal False Claims Act and various State false claims statutes.

    The whistleblower’s complaint alleged that AstraZeneca and Cephalon improperly treated certain fees paid to wholesalers as “discounts,” and the effect of this accounting practice was to falsely decrease the average price the companies reported to the federal government, improperly decreasing the rebates paid to the States.

    A National Association of Medicaid Fraud Control Units team participated in the investigation, conducted the settlement negotiations with AstraZeneca and Cephalon on behalf of the States and included representatives from the Offices of the Attorneys General for the States of Colorado, Massachusetts, Nevada, New York and South Carolina.

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