For Immediate Release - March 09, 2010

Attorney General Martha Coakley's Office Reaches $3.6 Million Settlement with Drug Manufacturer Actavis Elizabeth Over False and Inflated Price Reporting

BOSTON - Attorney General Martha Coakley's Office has reached a $3.6 million settlement agreement with Actavis Elizabeth LLC ("Actavis"), an Elizabeth, New Jersey-based pharmaceutical manufacturer, resolving a Massachusetts False Claims Act case pending in United States District Court in Boston. The lawsuit alleged Actavis reported false and inflated prices to drug industry price reporting services, which caused the Massachusetts Medicaid Program to pay inflated amounts for ingredient costs on prescriptions for Medicaid recipients. The monies recovered will be returned to the Massachusetts Medicaid Program, MassHealth.

"The Massachusetts Medicaid Program provides critical health care services to thousands of Massachusetts residents. This settlement represents a positive step forward in our efforts to address false price reporting, an issue that continues to afflict the program," Attorney General Coakley said. "Our office will continue to work with MassHealth and the federal government to maintain the integrity of the pharmaceutical reimbursement program and ensure that it is fair to all involved parties."

Actavis is one of a group of 13 generic drug manufacturers the Commonwealth sued in 2003 for allegedly falsely inflating the prices they reported to national pharmaceutical price reporting services. The Commonwealth's Medicaid Program uses prices reported by national price reporting services to determine what they will pay to pharmacies for ingredient costs in connection with prescription drugs. The Commonwealth alleged that by reporting the false and inflated prices, the pharmaceutical companies caused the Medicaid Program to pay inflated amounts for ingredient costs for prescriptions for Medicaid recipients. Medicaid is a joint federal-state program which provides healthcare services, including prescription drugs, to low income and disabled persons.

The settlement resolves the Commonwealth's claims related to the drugs that Actavis manufactured and sold during the years 1997 to 2003, including Clonazapam, Isosorbide Mononitrate and Lorazapam. In agreeing to the settlement, Actavis did not admit any wrongdoing and asserted that its price reporting was consistent with all legal standards. Actavis was formerly known as Purepac Pharmaceutical Co. and is a subsidiary of Actavis Group hf, an Icelandic firm that manufactures and sells generic drugs worldwide.

The Commonwealth has previously settled with nine other defendants in this case--Dey, Inc.; Barr Laboratories, Inc.; Duramed Pharmaceuticals, Inc; Ethex Corporation; Roxane Laboratories, Inc.; Teva Pharmaceuticals USA, Inc.; Ivax Corporation; Watson Pharma, Inc., and Watson Pharmaceuticals, Inc.--recovering a total of $16.7 million from those nine companies for the Massachusetts Medicaid Program. The case remains pending in federal court in Boston against three other defendants.

Attorney General Coakley's office has established itself nationally as a leader in the fight against fraud, waste and abuse in the Medicaid program. The office's Medicaid Fraud Division works to prevent and if necessary, prosecute provider fraud and violations of state law pertaining to fraud in the administration of the Medicaid Program. The division often works collaboratively with other enforcement authorities in other states, as well as with federal enforcement authorities. Since Attorney General Coakley took office in 2007, the Medicaid Fraud Division has recovered over $134 million dollars for the Massachusetts Medicaid program. In 2009, the division achieved its third consecutive year of record-breaking recoveries, returning $51.6 million to the Medicaid Program, including multi-million dollar settlements with such pharmaceutical giants as Astra Zeneca, Eli Lilly & Co., and Pfizer Inc.

This case was prosecuted by Assistant Attorneys General Peter A. Mullin, Nathaniel Yeager, Robert P. Patten, Colleen A. McCarthy, John Pina III, Gregory H. Matthews, Robyn P. Dollar and Steven T. Sharobem, with assistance from Investigators Anthony Megathlin, John J. Walsh and Steven Devlin, all of Attorney General Coakley's Medicaid Fraud Division, and with the cooperation and assistance of MassHealth and its staff.