TRENTON
- Attorney General Anne Milgram announced
today that New Jersey will receive $7.4
million in restitution in a Medicaid fraud
settlement negotiated with pharmaceutical
company Merck & Co., Inc.
The
settlement arose from two federal civil
false claim actions. A pharmaceutical company
must give the Medicaid program its “best
price” if it wants Medicaid to offer
reimbursement for its drugs. Best price
means the lowest price it charges to anyone.
Drug companies pay rebates to Medicaid to
bring program reimbursements in line with
the best price. It was alleged that Merck
failed in reporting its best price to factor
in discounts it gave to hospitals for purchasing
high volumes of its drugs, resulting in
underpayment of rebates to the Medicaid
program. This allegedly violated the Medicaid
Drug Rebate Act and resulted in the Medicaid
program reimbursing more for certain Merck
drugs including Zocor, Mevacor, Vioxx, and
Pepcid.
The
total national settlement with Merck is
$671 million, including interest. The Medicaid
program is jointly funded by the state and
federal governments. The joint federal and
state share of the settlement for the Medicaid
program in New Jersey is $16.7 million,
of which New Jersey will receive $7,453,872.
Merck was also ordered to enter into a corporate
integrity agreement with the U.S. Department
of Health and Human Services Office of Inspector
General regarding its business practices.
“This
civil settlement returns millions of dollars
to the New Jersey Medicaid program to fund
health care services and prescription drugs
for persons who otherwise might not be able
to afford them,” said Attorney General
Milgram. “We are committed to investigating
and prosecuting Medicaid fraud and other
abuses that affect the Medicaid program
in New Jersey.”
Attorney
General Milgram credited Assistant Attorney
General John Krayniak of the Medicaid Fraud
Control Unit in the Office of Insurance
Fraud Prosecutor for his efforts in this
matter. He was part of the state team that
negotiated this settlement along with representatives
of the United States Department of Justice.
Attorney
General Milgram stated that soon New Jersey
will have another tool to combat Medicaid
fraud. She explained that on Jan. 14, Governor
Corzine signed the New Jersey False Claims
Act, which will take effect on March 14
and which contains a whistleblower provision
to provide rewards to people, often corporate
insiders, who blow the whistle on fraud.
The
State of New Jersey administers the Medicaid
program through the Division of Medical
Assistance and Health Services and through
the Office of Insurance Fraud Prosecutor’s
Medicaid Fraud Control Unit, which investigates
both criminal and civil Medicaid fraud and
abuse in that program.
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