Two weeks ago, the Texas Office of the Attorney General quietly filed a lawsuit against yet another company associated with Texas Medicaid – the drug company AstroZeneca.
Millions of dollars in excess reimbursements
It accuses the company of defrauding the Texas Medicaid program with the off-label promotion of its drug Seroquel, claiming that the company’s illegal conduct resulted in millions of dollars in excessive reimbursements from Texas.
Last May, the OAG sued former Texas Medicaid claims administrator Xerox for its allegedly faulty prior authorization process for Medicaid orthodontic treatments in the state, amounting to a billion dollars in program expenditures.
Both companies deny the allegations.
The filing of the suit was picked up by the Wall Street Journal’s big pharma blog, Pharmalot, although the legal action is not mentioned on the OAG’s website.
Allegedly paid kickbacks to HHSC officials and Medicaid considered “low hanging fruit”
Key allegations are that:
1. AsroZeneca paid kickbacks amounting to $465,000 to two top mental health officials to help boost prescriptions of the drug.
2. The company targeted Texas Medicaid because they needed “to obtain significant government buy-in to achieve their financial goals for Seroquel” and “set their sights on Texas Medicaid, declaring it ‘low hanging fruit’ and ‘an absolute must win’ that would fuel brand growth.”
In fiscal year 2013, the system expended $24.1 billion on contracts. HHSC alone had contracting expenditures of more than $16 billion. Among these, critical contracts with managed care organizations serving the Medicaid program totaled more than $10 billion, a contract with an enrollment broker for support services related to eligibility operations for Medicaid and various other programs accounted for $112.2 million, and a contract with the claims administrator for the Medicaid program represented another $358.1 million.
Tempting fruit for some big fishes.