Indiana Recovers Money in Medicaid Settlement

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Indiana's Medicaid program will receive more than $181,000 as part of a multistate settlement with drug manufacturer Organon over drug pricing, kickbacks and other violations. The Dutch company's assets are now owned by Merck (NYSE: MRK).

October 19, 2014

News Release

INDIANAPOLIS, Ind. - Attorney General Greg Zoeller's office has recovered more than $181,000 for the Indiana Medicaid program by joining with other states and the federal government in a Medicaid fraud settlement with the drug manufacturer Organon over drug pricing and other violations.

Resulting from two whistleblower lawsuits, the combined settlement resolves allegations that Organon underpaid rebates to the State, offered improper financial incentives to nursing home pharmacies, promoted two of its antidepressants for unapproved uses and misrepresented its drug prices to the Indiana Medicaid program in order to reap larger margins and increased sales. Organon was headquartered in Oss, Netherlands and the company's assets now are owned by Merck.

"Taxpayers are the victims whenever a drug company causes false claims to be submitted to Indiana Medicaid for its products. Settlements resulting from whistleblower lawsuits are among the tools my office uses with our counterparts in other states to recover overpayments for false claims and restore funds to the Medicaid program so they can be put to their appropriate use," Zoeller said. The Attorney General's Office's Medicaid Fraud Control Unit participated in the multistate and federal investigation.

Total value of the combined settlements Organon will pay the states and the federal government to settle the Medicaid fraud lawsuits is $31 million. Of that, Indiana Medicaid will receive $162,345.71 in a settlement arising from a whistleblower lawsuit filed in Massachusetts, and $19,015.66 in a settlement arising from another whistleblower suit filed in Texas, for a total recovery of $181,361.37 to Indiana Medicaid.

Lawsuits whistleblowers filed under the False Claims Act alleged the drug company’s actions had caused ineligible claims for reimbursement to be submitted to the Medicaid program. Allegations were investigated by the federal government and states, which later reached a joint settlement with Organon. Among the allegations:

• Underpaid Rebates: The federal Medicaid Drug Rebate Program requires all drug manufacturers who supply products to Medicaid recipients to provide the “best price” available for those products. The investigation alleged Organon violated that requirement by underpaying rebates it owed Indiana Medicaid.

• Kickbacks: The investigation alleged that to induce the prescribing of its antidepressant drugs Remeron and Remeron SolTab, Organon offered nursing home pharmacy companies discounts and rebates that violated the federal Anti-Kickback Statute, thereby resulting in false claims being submitted by pharmacies to Indiana Medicaid for reimbursement.

• Off-Label Marketing: The investigation further alleged that Organon illegally promoted the sale and use of its antidepressants Remeron and Remeron SolTab for use in children and adolescents, uses not approved as safe and effective by the Food and Drug Administration (FDA).

• Pricing Misrepresentations: The investigation also alleged the drug company reported false and inflated drug prices to the Indiana Medicaid program but sold the same drugs at lower cost to nursing home pharmacies, thereby increasing the "spread" between the actual cost to pharmacies and the amount Medicaid reimburses for the drugs.

The joint settlement by the states and federal government with Organon was announced this week.

Under the state and federal versions of the False Claims Act, plaintiffs who expose fraud by a company against a government contract by filing a whistleblower or "qui tam" lawsuit can be eligible to receive a percentage of the recovery if the states or federal government later reach a settlement with the company.

"The False Claims Act is a useful tool in encouraging company insiders to bring to light fraud against government contracts so that the fraud can be halted, ineligible claims can be recovered and tax dollars can be reimbursed through settlements," Zoeller said. Zoeller thanked Deputy Attorney General Lawrence Carcare of the Medicaid Fraud Control Unit for his work on the Organon case.

The public can report fraud against the Indiana Medicaid program by contacting the Attorney General's Medicaid Fraud Control Unit (MFCU) at 1-800-382-1039. More information about whistleblower lawsuits is at this link: http://www.in.gov/attorneygeneral/2807.htm

Source: Office of Indiana Attorney General Greg Zoeller