(CN) – Pharmaceutical giant Schering-Plough agreed to pay $21.3 million on Thursday to settle claims that its subsidiary, Warrick Pharmaceuticals, inflated drug prices to make millions from California’s already fragile Medi-Cal program.
The underlying lawsuit was filed by a whistleblower who also recently accused Dey, Inc., Mylan Pharmaceuticals, Inc., Sandoz, Inc. and their parent companies of Medicaid fraud, California’s Attorney General Jerry Brown said in a statement.
The suits against those companies are still pending. The whistleblower, Ven-A-Care of the Florida Keys, Inc., filed the suits on behalf of California, Florida and the federal government, Brown said.
Schering-Plough merged with Merck in November, and is now known as Merck & Co.
The $21.3 million agreement is one of three settlements negotiated with Schering-Plough over falsely inflated drug prices, Brown said. The three settlements total $69 million.
“This is a company that made more than $12 billion in profits last year, yet still raided the pockets of California taxpayers,” Brown said.
One of the widely prescribed drugs that sold at inflated prices was Albuterol, generally used in inhalers, nebulizers and masks to treat asthma.
Warrick Pharmaceuticals “deliberately inflated the average wholesale prices it reported to California for Albuterol,” Brown said.
Medi-Cal sets reimbursement rates for pharmacies based on wholesale prices reported by drug manufacturers.
The California Department of Health Care Services, which is responsible for administering Medi-Cal, will receive $20.1 million from the settlement, Brown said. The remaining $1.2 million will go to the Attorney General’s False Claims Fund.