Ethex Settles With Massachusetts in Medicaid Fraud Case

The Massachusetts attorney general’s office announced it has reached a settlement agreement with generic drugmaker Ethex to resolve litigation related to Medicaid drug prices.

In the case, filed in the U.S District Court for the District of Massachusetts, the commonwealth sued Ethex and several other generic firms for allegedly inflating drug prices, Attorney General Martha Coakley’s office said Aug. 15.

According to Massachusetts district court records, the commonwealth filed suit in September 2003 against Mylan Laboratories, Barr Laboratories, Duramed Pharmaceuticals, Ivax, Warrick Pharmaceuticals, Watson Pharmaceuticals, Schein Pharmaceutical, Teva Pharmaceuticals, Par Pharmaceutical, Dey, Ethex, Purepac Pharmaceutical and Roxane Laboratories.

Massachusetts alleged that by reporting the inflated prices, Ethex caused the Medicaid program to pay inflated amounts for Medicaid recipients. According to the complaint, the wholesale acquisition costs and average wholesale prices “reported by each of the defendants directly and indirectly to the commonwealth do not reflect, and have no correlation to, the actual prices charged to customers for pharmaceutical products in the market.”

The complaint alleges that the defendants committed fraud and violated the Massachusetts Medicaid False Claims Act, among other counts.

Ethex, a subsidiary of KV Pharmaceutical, has agreed to make three payments of $191,666 each, for a total of $574,998, over the next two years, in addition to providing $150,000 in free drugs, the attorney general said. In agreeing to the settlement, the company denied any wrongdoing and asserted that its price reporting was consistent with all legal standards, the attorney general added.

A representative from Ethex did not return a request for comment by press time.

In April, the attorney general announced that it settled with Dey. The company agreed to pay $2.9 million and a 5 percent rebate on future purchases for a period of five years, while also denying any wrongdoing, the attorney general said.

Massachusetts was also recently involved in a lawsuit against Warner Chilcott and Barr Pharmaceuticals. The suit, filed in 2005, claimed the companies violated antitrust laws by entering into an agreement that prevented generic Ovcon (norethindrone/ethinyl estradiol) from reaching the marketplace.

While more than 30 states and the District of Columbia entered into a $5.5 million settlement with Warner Chilcott, the case against Barr continues to move forward, the attorney general said. — Breda Lund