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NC recoups $31.8 million from GlaxoSmithKline, AG Cooper announces

Release date: 9/6/2012

AG’s expanded Medicaid fraud unit taking on more cases than ever before

Raleigh:  North Carolina has recovered $31.8 million from drug maker GlaxoSmithKline as part of the largest health care fraud settlement in U.S. history, Attorney General Roy Cooper announced today.
“Wrongdoing by drug companies and health care providers wastes taxpayers’ money, deprives needy patients of care, and inflates medical costs for all of us,” said Cooper. “We’re continuing our crackdown on fraud and abuse in our health care system.”
The settlement with GlaxoSmithKline (GSK) is the latest recovery made by Cooper’s Medicaid Investigations Division, which has recouped nearly $500 million over the past decade and helped to convict hundreds of individuals on criminal charges. The division has nearly doubled in size in recent years with the addition of new attorneys, investigators, criminal information analysts and support staff, allowing it to take on 46 percent more investigations than before.

Of the $31.8 million recovered by North Carolina, nearly $3.9 million will go to North Carolina public schools. The remaining funds will go to support Medicaid efforts in the state.  The funds are part of a $3 billion national settlement to resolve allegations that GSK used various illegal schemes to market and price drugs including Paxil, Wellbutrin, Advair, Lamictal, and Zofran. The national settlement includes $2 billion in civil penalties and $1 billion in criminal fines. 
The settlement GSK resolves allegations that company unlawfully made false representations about drug safety and efficacy, offered kickbacks to doctors, marketed certain drugs for off-label use (uses not approved by the Food and Drug Administration), and underpaid rebates owed to taxpayer-funded programs including Medicaid. Specifically, North Carolina, other states and the federal government alleged that GSK:
  • Marketed the depression drugs Paxil and Wellbutrin, the asthma drug Advair, the seizure medication Lamictal, and the nausea drug Zofran for off-label uses;
  • Made false representations about the safety and efficacy of Paxil, Wellbutrin, Advair, Lamictal, Zofran, and the diabetes drug Avandia;
  • Offered kickbacks, including entertainment, cash, travel, and meals, to healthcare professionals to induce them to promote and prescribe Paxil, Wellbutrin, Advair, Lamictal, Zofran, the migraine drug Imitrex, the irritable bowel syndrome drug Lotronex, the asthma drug Flovent, and the shingles and herpes drug Valtrex; and
  • Submitted incorrect pricing data for various drugs, causing the company to underpay rebates owed to Medicaid and other taxpayer-funded health care programs. 
As part of the settlement, GSK also agreed to plead guilty to criminal charges that it violated the federal Food, Drug, and Cosmetic Act in connection with misbranding Wellbutrin and Paxil and failing to report certain clinical data regarding Avandia to the FDA.
The national settlement is based on four whistleblower actions brought by private individuals. North Carolina’s share of the settlement was reached by Cooper’s Medicaid Investigations Division (MID) and the North Carolina Division of Medical Assistance.
The settlement with GlaxoSmithKline is one of several major Medicaid fraud settlements reached by the Attorney General’s Office with drug makers in recent months, including:
  • $21.7 million recovered from McKesson Corporation for inflating prices on drugs, causing the state’s Medicaid program to pay too much for those drugs.
  • $11.7 million recovered from Maxim Health Services for submitting claims for services it didn’t provide and for submitting claims without the required documentation.
  • $818,490.47 recovered from Dava Pharmaceuticals, Inc. to resolve allegations that the company underpaid rebates it owed to Medicaid. 
The MID investigates fraud and abuse of Medicaid benefits by hospitals, doctors, pharmaceutical companies, medical equipment companies, mental health and personal care providers, ambulance services and others. The division also investigates patient abuse and neglect in nursing homes and other facilities that receive Medicaid funds.  The unit includes attorneys, investigators and State Bureau of Investigation agents who work closely with United States Attorneys, District Attorneys, and other state and federal law enforcement agencies.

“With more investigators, agents and prosecutors on the health care fraud beat, we’re working harder than ever to stop Medicaid cheaters,” Cooper said.

Media contact: Noelle Talley (919) 716-6413