States Bolstered by GlaxoSmithKline Settlement

By: - July 13, 2012 12:00 am

The country’s largest health-care fraud settlement will send millions of dollars back into 43 state Medicaid programs.

Drug maker GlaxoSmithKline has agreed to pay a record $3 billion to resolve charges of illegally marketing certain prescription drugs and overcharging government programs including Medicaid.

“GlaxoSmithKline illegally marketed several prescription drugs for ailments the medications were not intended to treat,” Ohio Attorney General Mike DeWine said in a statement when the settlement was released earlier this month. “The medicines were then overprescribed and paid for with Ohio taxpayer dollars,” DeWine said, announcing that the Ohio will receive $40 million under the settlement.

The company marketed the depression drug Paxil, for example, for use by children, and marketed the depression drug Wellbutrin for weight loss. Neither are approved uses for those drugs. The company’s inappropriate marketing included providing doctors with expensive resort vacations, ski trips to Colorado, European hunting trips, high-paid speaking tours and tickets to a Madonna concert, The Denver Post reported.

“There are no excuses for deceptively marketing unapproved drugs to children, offering kickbacks to health care professionals and ripping off the taxpayers by defrauding Medicaid and other programs,” New York Attorney General Eric Schneiderman said when he announced that New York’s Medicaid program will get $146 million as part of the settlement.

Officials from Ohio and New York were part of a team of the National Association of Medicaid Fraud Control Units that participated in the investigation and negotiated on behalf of the states. Others joining in were representatives from Massachusetts, California and Colorado.

The 43 states that participated in the settlement will share an estimated $500 million, according to the U.S. Justice Department. Louisiana, Maryland, Mississippi, New Mexico, South Carolina, Utah and West Virginia did not participate.

Since the federal and state governments jointly pay for the Medicaid program, the amount each state gets under the settlement will be split between the federal and state governments. Of Ohio’s $40 million, for example, $23.5 million will go back to the federal government and $16 million to the state. Kentucky will receive more than $28.2 million under the settlement, of which $8.5 million will go to the state Medicaid program. And Connecticut will receive $11 million, of which its net share is $5.7 million.

One of the reasons how much states get differs is because the amount the federal government pays toward a state’s Medicaid program varies based on criteria such as per capita income. It currently ranges from 50 percent in wealthier states like New York to up to 73 percent in Mississippi.

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