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Illinois Ends Protracted Drug Pricing Case With $248 Million Deal (1)

Oct. 28, 2019, 5:17 PMUpdated: Oct. 28, 2019, 9:11 PM

Fifteen drugmakers will pay $248 million to settle allegations they manipulated wholesale prices to increase their Medicaid reimbursements, Illinois Attorney General Kwame Raoul (D) said Oct. 28.

The settlement brings to $678 million the amount Illinois has been able to recover through a 2005 lawsuit against more than four dozen drug companies. This settlement, announced Oct. 28, resolves the litigation, a statement from Raoul’s office said.

Hardest hit under the settlement were GlaxoSmithKline LLC, which will pay $54.6 million; Johnson & Johnson Inc., which will pay $49.5 million; and Pfizer Inc., which will pay $41 million.

The lawsuit alleged the companies fraudulently published inflated average wholesale price information to induce state Medicaid programs to increase their reimbursement amounts. The scheme took advantage of the reliance of state Medicaid programs on average wholesale prices in setting reimbursement levels, according to the statement.

Representatives of companies that responded to requests for comment denied wrongdoing and said the settlement was an attempt to put the dispute behind them.

Other drugmakers named in the settlement are Abbott Laboratories Inc., Aventis Pharmaceuticals Inc., Aventis Behring LLC, B. Braun Medical Inc., Forest Laboratories Inc., Janssen Pharmaceutical Products LP, McNeil-PPC Inc., Ortho Biotech Products LP, Ortho-McNeil Pharmaceutical Inc., Novartis Pharmaceuticals Corp., Pharmacia Corp., and TAP Pharmaceutical Products Inc.

‘Deceptive Scheme’ Alleged

“These companies engaged in a deceptive and illegal scheme to manipulate the drug pricing system to boost their own earnings, and the people of Illinois paid the price,” Raoul said in the statement. The 2005 lawsuit was filed by then-Attorney General Lisa Madigan (D).

Pfizer said in a statement that it had settled the lawsuit to avoid the cost and distraction of litigation and continues to believe it “provided accurate pricing information and complied with all of its obligations under Illinois’ Medicaid program.”

Johnson & Johnson issued a statement that said settling the lawsuit was “the most efficient way to close the book on a dispute that was nearly 15 years old and related to government pricing formulas that have not been followed for many years.”

A Novartis spokesman said that it, too, had settled to avoid the cost and distraction of litigation, and that it had published clear and understandable pricing information that state Medicaid agencies “fully understood.”

A spokeswoman for Sanofi S.A., the successor of Aventis Pharmaceuticals Inc., said the company is “pleased to put this legacy litigation to rest with this settlement.”

The other drug companies did not respond immediately to a request for comment.

The case is Illinois v. Abbott Laboratories Inc., Ill. Cir. Ct., No. 05-CH-2474, settlement announced 10/28/19.

To contact the reporter on this story: Christopher Brown in St. Louis at ChrisBrown@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Peggy Aulino at maulino@bloomberglaw.com