Taro Pharmaceuticals|Fined $19.5 Million

AUSTIN (CN) - Taro Pharmaceuticals will pay $19.5 million to settle a Medicaid fraud investigation, the Texas attorney general said.

The civil investigation alleged the Hawthorne, N.Y.-based company reported inflated drug prices to Medicaid for several years.

Under the settlement, Taro will pay Texas $8.75 million to Texas's general revenue fund. The rest of the money will reimburse the federal government, which jointly funds the state's Medicaid program.

Attorney General Greg Abbott's Office said it has investigated dozens of drugmakers since 2000 for reporting inflated drug prices to the program.

"The state's investigation against Taro found that for 11 years, Taro violated Texas law when it misreported the prices of various drugs to the Medicaid program," the attorney general said in a statement Monday. "As a result, Medicaid reimbursed pharmacies more than it should have for certain of the companies' products."

Drugmakers are required to file reports with Medicaid that disclose the prices they charge pharmacies, wholesalers and distributors for drugs. Taro used its illegally created "spreads" between the inflated and actual price to illegally induce pharmacies to purchase their drugs, Abbott said.

Texas's Civil Medicaid Fraud Division has notched more than $500 million in recoveries for the state since 2002. Total recoveries for the state and federal governments exceed $1.46 billion.

Taro did not immediately respond to a request for comment.

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