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Novartis Settles Medicaid Fraud Claims for $19.9M

AUSTIN (CN) - Pharmaceutical giant Novartis agreed Tuesday to pay $19.9 million to settle claims that it deceptively marketed a topical skin cream to defraud Medicaid.

Texas Attorney General Greg Abbott said a state investigation found that Novartis illegally marketed its exzema drug Elidel to treat infant children. He said the company failed to disclose side effects, including cancer-related risks.

"Evidence uncovered by the state revealed that Novartis improperly urged physicians to prescribe Elidel to children under two years of age for purposes that had not been approved by the U.S. Food and Drug Administration," prosecutors said in a statement. "Because of the defendant's misrepresentations, the Texas Medicaid program overpaid for Elidel prescriptions."

Under the settlement, the U.S. government will receive approximately $13.3 million while Texas will receive approximately $6.6 million. The unnamed whistle-blower who reported the activity to authorities will also receive a share of the settlement, as well as recovery for investigative and legal costs.

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