California-based pharmaceutical company Dey will pay $2.9 million to settle a Missouri lawsuit that accused the company of inflating its Medicaid reimbursements by falsely increasing the average wholesale prices of their drugs, Missouri Attorney General Jay Nixon (D) announced Tuesday, the St. Louis Post-Dispatch reports (St. Louis Post-Dispatch, 4/26). The lawsuit, filed in May 2005, accused Dey and New Jersey-based Warrick Pharmaceuticals of increasing the AWPs of three respiratory drugs. Nixon estimated that the companies overcharged the state Medicaid program by at least $15 million over 11 years. He said they created large discrepancies between AWPs and actual costs. The lawsuit also stated that the companies "knowingly and intentionally" misled an independent company that compiles drug-pricing data (Kaiser Daily Health Policy Report, 5/13/05). Dey will pay $2.7 million to the Medicaid Fraud Reimbursement Fund and $200,000 to a consumer protection fund. Suits against several other companies accused of similar schemes are pending, Nixon said (St. Louis Post-Dispatch, 4/26).

"Reprinted with permission from kaisernetwork. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at kaisernetwork/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.