Raleigh, N.C. — Drug maker Aventis Pharmaceuticals has agreed to pay $95.5 million to states and the federal government, including $2.2 million to North Carolina, for underpaying drug rebates to Medicaid for allergy medications, N.C. Attorney General Roy Cooper announced Wednesday.

“Underpaying rebates to Medicaid means overcharging North Carolina taxpayers,” Cooper said in a statement released by his spokeswoman.

The settlement agreement with Aventis resolves allegations that between 1995 and 2000, Aventis and its corporate predecessors knowingly misreported best prices for Azmacort, Nasacort and Nasacort AQ. As a result, Medicaid programs in North Carolina and other states paid too much for Aventis’ allergy nasal sprays, Cooper said.

Under the Medicaid Drug Rebate Statute, Aventis is required to report to Medicaid the lowest price that it charged commercial customers for its drugs and to pay quarterly rebates to Medicaid based on those reported prices.

To avoid reporting the best price for Azmacort, Nasacort and Nasacort AQ, Aventis repackaged the drugs under health maintenance organization Kaiser Permanente’s private label, Cooper said.

The private label sales meant that Aventis failed to pay millions of dollars in drug rebates it should have paid to Medicaid and other federal health programs.

Medicaid is a joint federal-state program that provides health insurance for the poor. The Attorney General's Medicaid Investigations Unit prosecutes fraud, patient abuse and embezzlement in Medicaid-funded facilities.

The National Association of Medicaid Fraud Control Units negotiated the settlement on behalf of the states. The North Carolina settlement was reached by Cooper’s Medicaid Investigations Unit and the North Carolina Department of Medical Assistance.