Law360, New York (August 11, 2014, 2:39 PM ET) — The state of Texas has reached a $19.5 million settlement with Taro Pharmaceuticals USA Inc. to resolve allegations that the drug company fraudulently reported inflated drug prices to the Medicaid program, the state’s attorney general’s office said on Monday.
Under the agreement, Taro will pay $8.75 million to the state’s general revenue fund. The federal government is also entitled to part of the settlement proceeds since it jointly funds the Medicaid program with the state, the office said. Lauren Bean, spokeswoman for the attorney general’s office, told Law360 on Monday that the federal government will also receive $8.75 million, with the state keeping the remaining $2 million of the settlement funds for attorneys’ fees and costs.
The state said that the attorney general’s Civil Medicaid Fraud team discovered that Taro violated Texas law by misreporting the prices of numerous drugs to Medicaid for 11 years. The fraud team has investigated dozens of pharmaceutical manufacturers for reporting inflated drug prices to the Medicaid program since 2000, it said.