According to Hoffman, the State has been paid approximately $3.43 million by Ranbaxy, a generic pharmaceutical manufacturer based in Gurgaon, India. Previously, Ranbaxy entered into a multi-state and federal settlement resolving allegations that it introduced adulterated drugs into interstate commerce and, as a result, caused false or fraudulent Medicaid claims to be submitted.

“False billing to government health care programs costs every one of us in the end,” Acting Attorney General Hoffman said. “Through our own efforts, and through collaboration with our state and federal partners, we are committed to combating Medicaid fraud and abuse.”

Hoffman explained that an investigation of Ranbaxy by the participating states and the federal government resulted from a qui tam action filed in U.S. District Court in Maryland under the federal False Claims Act, as well as various state false claims statutes. The whistleblower’s complaint alleged that Ranbaxy knowingly manufactured, distributed and sold generic pharmaceutical products whose strength, purity and quality fell below federal Food and Drug Administration standards. The products at issue included 26 generic pharmaceutical products manufactured at Ranbaxy’s facilities in Paonta Sahib and Dewas, India, at various times between April 1, 2003 and September 16, 2010.

Overall, Ranbaxy has paid the participating states and the federal government $350 million dollars in civil damages and penalties to resolve civil allegations.
Approximately $267 million of that money will go to Medicaid programs, which are funded jointly by the states and the federal government. The remaining $83 million is designated for other federal health care programs affected by Ranbaxy’s conduct.

 In addition, Ranbaxy USA, a subsidiary, has pled guilty to seven felony counts alleging violations of the U.S. Food, Drug, and Cosmetic Act, and has agreed to pay $150 million dollars in criminal fines and forfeitures. Also, Ranbaxy entered into a Consent Decree in January 2012 with the federal government to address outstanding data integrity and manufacturing practice issues in the two Indian manufacturing plants at issue. These provisions include a wide range of actions to correct its violations and to ensure that the violations do not occur again.

The other settlement payment to New Jersey announced by Acting Attorney General Hoffman today is a $320,757 payment by California-based pharmaceutical manufacturer Amgen. Amgen was alleged to have violated certain states’ false claims statutes, including those in New Jersey, by reporting inflated pricing data for its prescription drugs Aranesp, Enbrel, Epogen, Neulasta, Neupogen, and Sensipar, thereby causing Medicaid programs in New Jersey and the other settling states to overpay for those drugs.

New Jersey Acting Insurance Fraud Prosecutor Ronald Chillemi explained that the drug pricing data at issue in this settlement concerns the Average Wholesale Price and Wholesale Acquisition Cost benchmarks used by most states’ Medicaid programs, including New Jersey’s, to set pharmacy reimbursement rates for pharmaceuticals dispensed to state Medicaid beneficiaries.

According to Chillemi, New Jersey and 35 other states alleged that Amgen reported inflated Average Wholesale Price and Wholesale Acquisition Cost pricing data to First Data Bank and other drug pricing compendia, thereby creating an artificially inflated “spread” between the price for which Medicaid providers dispensed the named drugs to beneficiaries, and the price at which the states reimbursed providers for those drugs.

The participating states also alleged that after creating the inflated spread, Amgen marketed that spread to Medicaid providers in order to boost Amgen’s sales of the named drugs, Chillemi said.

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