State of Hawaii Attorney General’s office announces settlement to resolve fraud charges against more than 40 pharmaceutical companies accused of defrauding the state’s Medicaid system

MONTGOMERY, ALA. (October 7, 2010)  – The State of Hawaii has reached a settlement agreement with pharmaceutical companies accused of defrauding the state’s Medicaid system by overcharging for medications. The State will receive more than $82 million from a number of different drug companies involved in the litigation, which accused the companies of marketing and selling prescription drugs using fraudulent and inflated “average wholesale price” figures.

This settlement is the latest in a series of ongoing litigation in states throughout the country against pharmaceutical companies alleging Medicaid fraud.  Attorneys from Beasley, Allen, Crow, Methvin, Portis & Miles, P.C., represented the State of Hawaii, along with law firms Miner, Barnhill & Galland, which has offices in Wisconsin and Chicago; and Price Okamoto & Lum of Honolulu.

“Hawaii is yet another example of how the drug manufacturers have systematically perpetrated their fraudulent pricing schemes on state and federal Medicaid programs to line their pockets at the expense of the taxpayers of this country,” said W. Daniel “Dee” Miles, III, head of Beasley Allen’s Consumer Fraud section. “But for the jury system in this country, this fraudulent scheme may have never been unveiled. The Hawaii judicial system is the real hero in this case and the State of Hawaii is the beneficiary.”

Among the settlements included in the $82 million total are:

  • $28 million by Merck Sharp & Dohme Corp. (formerly known as Merck & Co., Inc.)
  • $10 million collectively by AstraZeneca Pharmaceuticals, LP; AstraZeneca LP; GlaxoSmithKline LLC (formerly known as SmithKlineBeecham Corporation dba GlaxoSmithKline), and Novartis Pharmaceuticals Corporation
  • $8.2 million by Pfizer, Inc. and Pharmacia Corporation
  • $6.5 million from Teva Pharmaceuticals USA Inc., Barr Laboratories, Inc.; Ivax Corporation, Ivax Pharmaceuticals, Inc.; and Sicor Pharmaceuticals, Inc.
  • $5.2 million from Johnson & Johnson, Janssen Pharmaceutical Products, LP; Ortho Biotech Products, LP; McNeil-PPC, Inc.; and Centocor, Inc.

The lawsuit was filed by the State of Hawaii in 2006, and alleged that for more than a decade the drug makers had published inflated prices for prescription drugs, causing the overpayment of millions of dollars in drug costs.



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