King Pharmaceuticals has agreed to pay roughly $124 million to settle state and federal charges that it underpaid rebates owed to Medicaid and other governmental pricing programs.
The settlement agreement, which must be approved by the U.S. District Court for the Eastern District of Pennsylvania, calls for King to pay $62 million to cover its underpayments and an additional $62 million to cover interest, costs and penalties. According to federal investigators, King failed to accurately report the average manufacturer price and best price for its Medicaid-reimbursed drugs between 1994 and 2002.
King also signed a five-year corporate integrity agreement (CIA) with the HHS, under which it is required to maintain its current corporate compliance program, provide periodic compliance reports to the HHS Office of Inspector General and submit to audits related to its Medicaid rebate calculations. The firm noted that the CIA "will not affect King's ongoing business with any customers, including the federal and state governments."
In addition to the HHS, King reached settlements with the Department of Justice, the U.S. Attorney's Office for the Eastern District of Pennsylvania and the Department of Veterans Affairs. However, the settlement does not resolve an ongoing Securities & Exchange Commission (SEC) probe into King's pricing and sales practices. King announced in March 2003 that the SEC was investigating the company's Medicaid rebate policies, including the payment of rebates on high-blood pressure treatment Altace (ramipril).
"Although the SEC could still consider civil charges against individuals currently or formerly associated with King in connection with the governmental pricing matter, King does not believe that any governmental unit with authority to assert criminal charges is considering any charges of that kind," King said recently.