New Jersey to Receive More Than $7 Million in Medicaid Settlement With Merck & Co.

February 7, 2008 -- TRENTON - New Jersey Attorney General Anne Milgram announced today that New Jersey will receive $7.4 million in restitution in a Medicaid fraud settlement negotiated with pharmaceutical company Merck & Co., Inc.

The settlement arose from two federal civil false claim actions. A pharmaceutical company must give the Medicaid program its “best price” if it wants Medicaid to offer reimbursement for its drugs. Best price means the lowest price it charges to anyone. Drug companies pay rebates to Medicaid to bring program reimbursements in line with the best price. It was alleged that Merck failed in reporting its best price to factor in discounts it gave to hospitals for purchasing high volumes of its drugs, resulting in underpayment of rebates to the Medicaid program. This allegedly violated the Medicaid Drug Rebate Act and resulted in the Medicaid program reimbursing more for certain Merck drugs including Zocor, Mevacor, Vioxx, and Pepcid.

The total national settlement with Merck is $671 million, including interest. The Medicaid program is jointly funded by the state and federal governments. The joint federal and state share of the settlement for the Medicaid program in New Jersey is $16.7 million, of which New Jersey will receive $7,453,872. Merck was also ordered to enter into a corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General regarding its business practices.

“This civil settlement returns millions of dollars to the New Jersey Medicaid program to fund health care services and prescription drugs for persons who otherwise might not be able to afford them,” said Attorney General Milgram. “We are committed to investigating and prosecuting Medicaid fraud and other abuses that affect the Medicaid program in New Jersey.”

Attorney General Milgram credited Assistant Attorney General John Krayniak of the Medicaid Fraud Control Unit in the Office of Insurance Fraud Prosecutor for his efforts in this matter. He was part of the state team that negotiated this settlement along with representatives of the United States Department of Justice.

Attorney General Milgram stated that soon New Jersey will have another tool to combat Medicaid fraud. She explained that on Jan. 14, Governor Corzine signed the New Jersey False Claims Act, which will take effect on March 14 and which contains a whistleblower provision to provide rewards to people, often corporate insiders, who blow the whistle on fraud.

The State of New Jersey administers the Medicaid program through the Division of Medical Assistance and Health Services and through the Office of Insurance Fraud Prosecutor’s Medicaid Fraud Control Unit, which investigates both criminal and civil Medicaid fraud and abuse in that program.

Source: New Jersey Attorney General

Bookmark/Search this post with:

 •    •    •    •    •    •    •    •    •    •    •    •