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Texas AG Secures $25 Million Agreement with Drug Manufacturer over Medicaid Fraud Allegations

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Texas Attorney General's Office:

AUSTIN – Texas Attorney General Greg Abbott today announced the resolution of a civil Medicaid fraud investigation that will yield more than $10 million for the State of Texas. According to the State's investigation, New York-based pharmaceutical manufacturer Hi-Tech Pharmacal Co., Inc. reported fraudulently inflated generic drug prices to the Medicaid program.

Under today's agreement, Hi-Tech must pay a total of $25 million to resolve the State's civil Medicaid fraud allegations. Because Medicaid is jointly funded by the State and the federal government, the federal government is entitled to a share of the total monetary settlement. Texas' share of the settlement proceeds is approximately $11.2 million. Additionally, the Texas Attorney General's Office will recover investigative and legal costs associated with the case.

Under state law, drug manufacturers must file reports with the Medicaid program that disclose the prices they charge pharmacies, wholesalers and distributors for their products. When manufacturers improperly report inflated market prices for their drugs, Medicaid reimburses pharmacies at vastly inflated rates. The State's investigation revealed that Hi-Tech misreported the prices of various generic drugs to the Medicaid program. As a result, the taxpayer-funded program was overcharged for certain of the defendant's products.

Nationally recognized for its successful efforts to recover funds wrongfully taken from the Medicaid program, the Texas Attorney General's Civil Medicaid Fraud Division (CMF) is responsible for pursuing fraud claims through civil enforcement actions. Since 2002, CMF's recoveries for the State of Texas have passed the $400 million mark while total recoveries for the State and federal government now exceed $1 billion.

For more information about the Civil Medicaid Fraud Division's efforts to eliminate waste, fraud and abuse in the Texas Medicaid program, access the Office of the Attorney General's website at www.texasattorneygeneral.gov.

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