AstraZeneca, Cephalon Settle Medicaid Rebate Case for $54 Million

AstraZeneca and Cephalon have agreed to pay $54 million, plus interest, to settle allegations that they knowingly underpaid quarterly rebates owed to states under the Medicaid program.

According to the agreement, reached Monday, AZ will pay $46.5 million — $26.7 million to the U.S. and $19.8 million to states participating in the settlement — and Cephalon will pay $7.5 million — $4.3 million to the federal government and $3.2 million to the states, the Justice Department says.

The lawsuit, United States ex rel. Streck v. Allergan, Inc., et al., names multiple drugs manufactured by the companies, including Cephalon’s sleep-disorder drug Provigil and AZ’s cholesterol-lowering therapy Crestor.

AZ spokesman Blake Swagler saidthat the company’s price reporting decisions were made in good faith. Teva, which owns Cephalon, said it is pleased to have reached the settlement.

The settlement partially resolves a 2008 qui tam lawsuit, Streck v. Allergan, Inc. et al., filed in the U.S. District Court for the Eastern District of Pennsylvania. The amount that will be paid to whistleblower Ronald Streck, a pharmacist, has not been determined, according to the government. — Jonathon Shacat