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For Immediate Release:  
For Further Information:
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September 11, 2006  
Division of Criminal Justice
609-292-4791

Office of The Attorney General
- Anne Milgram, Acting Attorney General
Division of Criminal Justice
- Gregory A. Paw, Director
Office of the Insurance Fraud Prosecutor
-
Greta Gooden Brown, Insurance Fraud Prosecutor

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New Jersey Receives Medicaid Fraud Civil Settlement in
Connection with Glaxo Smithkline Prescription Drugs

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TRENTON - Acting Attorney General Anne Milgram announced that New Jersey has received a check for nearly half a million dollars as a result of a national settlement which required pharmaceutical company Glaxo SmithKline to pay over $145 million in damages and penalties to federal and state Medicaid programs across the country.

“This settlement returns a sizable amount of money to the State of New Jersey and to the Medicaid program, which assists and benefits those citizens who need the aid the most,” said Acting Attorney General Milgram. “We have dedicated significant resources to investigating and prosecuting Medicaid fraud in New Jersey.”

“Every dollar lost to fraud or abuse is one less dollar available to help the most needy citizens of our state,” said Insurance Fraud Prosecutor Greta Gooden Brown. “The Office of the Insurance Fraud Prosecutor is committed to fighting healthcare fraud and returning much needed dollars to victims of insurance fraud including Medicaid, insurance companies and taxpayers.”

New Jersey was reimbursed $472,382. More specifically, the New Jersey Medicaid program, which is funded by the state and federal governments, received $900,919, of which the state received $408,178, including $204,089 as restitution and $204,089 as a penalty. This recovery was increased by $64,204 in post-agreement interest.

According to Division of Criminal Justice Director Gregory A. Paw, the Medicaid Fraud Control Unit of the Office of the Insurance Fraud Prosecutor participated in a national investigation of Glaxo SmithKline. The investigation was initiated when a federal false claims lawsuit was filed alleging that Glaxo SmithKline inflated the average wholesale price for Zofran and Kytril, which are used to prevent or treat nausea.

It was alleged that Glaxo SmithKline set, reported and maintained fraudulent and inflated average wholesale price information for these drugs. The average wholesale price for drugs is used by government sponsored health care plans such as Medicaid and Medicare to determine theamount drug purchasers will be reimbursed.

The New Jersey Medicaid program would reimburse hospital and other pharmacies for Medicaid claims. By inflating the average wholesale price, the Medicaid program paid more when reimbursing claims for the drugs. Glaxo SmithKline was able to increase its market share through this scheme, earning more money for itself.

In total, Glaxo SmithKline agreed to pay national damages for inflated Medicare and Medicaid claims in the amount of $149 million.

The Medicaid program provides health care services and prescription drugs to persons who may not otherwise be able to afford such services and medicines. The State of New Jersey administers the Medicaid program through the Division of Medical Assistance and Health Services. The Office of the Insurance Fraud Prosecutor’s Medicaid Fraud Control Unit investigates both criminal and civil Medicaid fraud and abuse in that program.

www.NJInsuranceFraud.org.

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