Schering-Plough has agreed to pay a total of $69 million to the federal government and the states of California and Florida to settle allegations that it deliberately inflated the cost of drugs, causing Medicaid to overpay pharmacy reimbursements.
The press release from the California Attorney General's Office (which includes a copy of the settlement agreement) notes that this is one of several whistleblower suits filed by Ven-A-Care of the Florida Keys, Inc.
The settlement resolves allegations that Warrick Pharmaceuticals, a subsidiary of Schering-Plough, deliberately inflated the Average Wholesale Prices (AWPs) it reported for Albuterol and other drugs. Medicaid sets the reimbursement rates for pharmacies for many of the drugs dispensed to their patients based on the AWPs reported by drug manufacturers. By reporting falsely inflated AWPs, some drug manufacturers caused Medicaid to overpay millions of dollars in pharmacy reimbursement.