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Drug companies to pay for Medicaid fraud

North Carolina will receive $3.5 million from a settlement with pharmaceutical firms that misclassified drugs so they could pay less to states under Medicaid rules.

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RALEIGH, N.C. — Four pharmaceutical companies will pay $3.5 million to North Carolina to settle a Medicaid fraud case, Attorney General Roy Cooper announced Tuesday.

The payment is part of a $124 million nationwide settlement by Mylan Pharmaceuticals Inc., UDL Laboratories Inc., AstraZeneca Pharmaceuticals LP and Ortho McNeil Pharmaceutical Inc.

The four companies had agreed to pay quarterly rebates to Medicaid, the joint federal-state program that provides health insurance for the poor, based on the amount of money that Medicaid paid for each company’s drugs. The precise amount of rebate owed is determined in part by whether a particular drug is considered an innovator drug or a non-innovator drug, with drug companies required to pay a higher rebate amount for innovator drugs.

North Carolina, several other states and the federal government alleged that the companies misclassified drugs so that they could lower their rebate payments.

“Running up profits by underpaying Medicaid hurts patients and taxpayers,” Cooper said in a statement. “We’ll keep working to uncover fraud and make Medicaid abusers pay what they owe.”

Mylan and UDL agreed to pay $118 million to resolve allegations that they underpaid Medicaid rebates on drugs for angina, high blood pressure and adema. AstraZeneca agreed to pay $2.6 million to resolve allegations that it underpaid rebates for Albuterol, a medication used to treat asthma and other breathing disorders. Ortho McNeil agreed to pay $3.4 million to resolve allegations that it underpaid its rebates for Dermatop, which is used to treat skin conditions.

About $459,000 of North Carolina's portion of the settlement will go to public schools statewide, Cooper said.