Schneiderman announces $11 million national settlement with biotech giant that inflated Medicaid bills

Amgen Inc. to pay New York $3.3 million for inflating prescription drug price data, causing New York and other states' Medicaid programs to overpay for those drugs

Schneiderman: "Drug companies will be held to account when they rip-off taxpayers"

Attorney General Eric T. Schneiderman announced Monday that New York, along with 35 other states, reached an $11 million settlement with the drug manufacturer Amgen Inc. The agreement resolves claims that the company inflated pricing data for six of its prescription drugs in a way that caused New York and the other settling states' Medicaid programs to overpay for those drugs.

"There are no excuses for ripping off New York state taxpayers and defrauding our Medicaid programs," Schneiderman said. "At a time when state budgets are already strained, I am committed to going after any company that rips off our taxpayers - no matter how big they are. With this settlement, the message we are sending is clear: Biotechnology giants are not above the law, and my office will continue to ensure that those who cheat the system are held accountable."

The drug pricing data at issue in this settlement concerns the "Average Wholesale Price" (AWP) and "Wholesale Acquisition Cost" (WAC), benchmarks used by most states' Medicaid programs, including New York, to set pharmacy reimbursement rates for pharmaceuticals dispensed to state Medicaid beneficiaries. New York and the 35 other states alleged that Amgen reported inflated AWP and WAC pricing data, thereby creating an artificially inflated "spread" between the price at which Medicaid providers dispensed the named drugs and the price at which the states reimbursed providers for the drugs. After creating the inflated spread, Amgen marketed that spread to Medicaid providers in order to boost Amgen's sales of Aranesp, Enbrel, Epogen, Neulasta, Neupogen and Sensipar. These drugs are used to treat kidney disease and cancer patients.

This settlement was part of a larger investigation into allegations of illegal marketing practices, which included promoting the drugs for unapproved uses, and illegal kickbacks schemes by Amgen. The investigation resulted in a misdemeanor guilty plea in federal court by Amgen for introducing a misbranded drug into interstate commerce. The company has now paid a total of more than $647 million in damages related to the investigations, with New York's Medicaid program recovering more than $19.2 million of the money.

New York's recovery pursuant to this national, multi-state settlement is $3.3 million.

In this instance, as in the previous settlements, New York lead a national team made up of state attorneys and analysts from California, Illinois, Indiana and North Carolina, and worked through the National Association of Medicaid Fraud Control Units.