Attorney General recovers $1.2 million for Medicaid
AUSTIN - Texas Attorney General Greg Abbott today reached a $1.2 million settlement agreement with Alpha Therapeutic Corp. Todays agreement resolves the states investigation into the amount the pharmaceutical manufacturer charged Medicaid for its products.
According to state investigators Alpha Therapeutic marketed several drugs that were dispensed to Medicaid patients under the names Alphanate Alphanine Profilnine and Venoglobulin. In the mid-1990s the defendant began improperly reporting its products prices. As a result Alpha guaranteed profits for its retail pharmacy customers at the expense of the taxpayer-funded health care Medicaid program.
State and federal law requires that drug manufacturers report the prices at which they sell their products to various providers including pharmacies wholesalers and distributors. The Texas Medicaid program uses this pricing information to estimate the costs Medicaid providers pay to acquire the drug manufacturers products. Medicaid providers bill the state-run program for these costs plus prescription dispensing fees and Medicaid reimburses the providers.
As a result when a manufacturer reports inflated prices to the Medicaid program as happened in this case the taxpayer-funded program vastly overpays providers for their products. The difference between what a provider actually pays to purchase a drug and what is reimbursed by Medicaid is called the spread."
Because of Alpha Therapeutics improper reporting Texas Medicaid over-reimbursed providers for the defendants drugs. The windfall profits from these inflated reimbursements which date back to the early 1990s induced providers to favor Alpha Therapeutic over other manufacturers. The result was a long-term but unlawful market niche for the company.
Todays enforcement action began with a sealed whistleblower lawsuit that was filed by home-infusion pharmacy Ven-a-Care of the Florida Keys Inc. Acting on similar information from Ven-a-Care the Attorney General has taken action against numerous defendants that launched similar drug-pricing schemes.
To obtain more information about the Attorney Generals efforts to fight Medicaid fraud access the agencys Web site at
www.texasattorneygeneral.gov
