For Immediate Release - December 20, 2010

Attorney General Martha Coakley's Office Reaches $500,000 Settlement with Drug Manufacturer Par Pharmaceutical

BOSTON - Attorney General Martha Coakley's Office and Par Pharmaceutical, Inc. (Par), a Spring Valley, New York, pharmaceutical manufacturer, have reached an agreement in which Par will pay $500,000 to the Commonwealth to settle a Massachusetts False Claims Act case that was pending in United States District Court in Boston. The lawsuit alleged that Par 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 funds recovered will be returned to the Massachusetts Medicaid Program, also known as MassHealth.

"The Massachusetts Medicaid Program provides vital health care services to thousands of poor, elderly and disabled Massachusetts residents. This settlement is a step forward in our efforts to correct false price reporting," AG 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 parties."

Par is one 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, like many other Medicaid programs nationwide, uses prices reported by pharmaceutical manufacturers to national price reporting services to determine what it 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 drugs that Par manufactured and sold during the years 1998 to 2003, including Ibuprofen and Ranitidine HCL. In agreeing to the settlement, Par did not admit any wrongdoing.

The Commonwealth has previously settled with eleven 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. (f/k/a Schein Pharmaceutical Inc.); Watson Pharmaceuticals, Inc.; Actavis Elizabeth LLC (f/k/a Purepac Pharmaceutical Co.) and Mylan, Inc and its wholly-owned subsidiary, Mylan Pharmaceuticals Inc--recovering a total of $22.9 million from those companies for the Medicaid program.

On September 30, 2010 AG Coakley's Office won a $4.6 million verdict from a jury in federal court in Boston against Merck & Co., Inc. (f/k/a Schering-Plough Corporation), and its subsidiaries Schering Corporation and Warrick Pharmaceuticals Corporation, as part of this case. The Commonwealth has pending a motion for the award of $191 million in civil penalties as a result of the jury's verdict. The defendants have pending a motion for judgment in their favor, notwithstanding the jury's verdict, or a new trial.

Attorney General Coakley's Medicaid Fraud Division works to prevent and prosecute provider fraud and violations of state law in the administration of the Medicaid program. The division often works with law enforcement authorities in other states, and federal authorities, in a coordinated effort to prosecute nationwide and multi-state cases. Since Attorney General Coakley took office in 2007, the Medicaid Fraud Division has recovered over $178 million for the Massachusetts Medicaid program.

This case was prosecuted by Assistant Attorneys General Peter A. Mullin, Nathaniel Yeager, Robert P. Patten, 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 the MassHealth Pharmacy Program and its staff.

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