Attorney General's News Release

November 1, 2005

Nixon recoups $3 million for taxpayers in settlement with drug company that underpaid rebates to Medicaid

Jefferson City, Mo. — Missouri Attorney General Jay Nixon has obtained more than $3 million from a pharmaceutical company that incorrectly reported prices for its generic drugs, resulting in the underpayment of rebates to the state Medicaid program.

King Pharmaceuticals Inc., a Tennessee-headquartered manufacturer of generic drugs, today entered into civil agreements totaling $124 million with Missouri, 48 other states and the U.S. Department of Justice to address allegations that King had not accurately calculated its prices from 1994 to 2002. The settlement with the Department of Justice was filed in federal district court in Philadelphia.

Missouri's participation in the settlement will result in $3,088,917 going back to taxpayers; $1,241,173 of that amount will reimburse the Missouri Medicaid program, and the balance will go to the federal government for its Medicaid costs.

Negotiations for the states were led by representatives from Missouri, New York, Massachusetts, Delaware and Florida.

"Waste, fraud and abuse remain among our most significant challenges when to comes to providing medical coverage to the state's low-income families," Nixon said. "In addition to returning these funds to the state's coffers for their intended purpose, this settlement also sends a clear message: that we will aggressively pursue corporations that abuse the state Medicaid program for their own profit."

As a result of the incorrect price calculations, Medicaid and other programs that received rebates from King Pharmaceuticals for reimbursing providers for the drugs were underpaid some $62 million nationwide. The settlements include a double damages penalty, resulting in the total settlement of $124 million.

The civil settlements with King Pharmaceuticals require the company to enter into a Corporate Integrity Agreement with the Office of Inspector General, U.S. Department of Health and Human Services to ensure future compliance with the law.

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