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N.D. shares in settlement with drug manufacturers

May 20, 2003

Bismarck, N.D. - North Dakota Governor John Hoeven announced today that the state will share in the largest national Medicaid fraud settlement, which involves two major pharmaceutical companies. North Dakota's portion of the $344 million settlement with Bayer and GlaxoSmithKline totals $652,452.

"We are thankful for the efforts of the many state and federal officials involved in investigating and handling the cases," Governor Hoeven said. "These settlements will help low-income people obtain important Medicaid services."

Carol K. Olson, Executive Director of the Department of Human Services, which administers the North Dakota Medicaid program, said the Attorney General's Office conducted the necessary legal work so that the state could participate in the settlements.

In the Bayer case, North Dakota's total share of the settlement is $447,040, and the state will retain $155,085. The state's share of the GlaxoSmithKline settlement totals $205,412 of which the state will retain $70,083.

Officials do not know when the state will receive the settlement funds. When the funds arrive, the federal government will receive its portion, and the remaining $225,168 will be added to the state's Medicaid budget. The funds must be dedicated to Medicaid because the settlements include restitution to state Medicaid programs for overpayments for specific prescription medications, as well as penalties.

To participate in the Medicaid program, drug manufacturers must provide the Centers for Medicare and Medicaid with information about their "best price" for each product. State Medicaid programs receive rebates based on that information. Bayer and GlaxoSmithKline relabeled and repackaged drugs, selling them at deep discounts directly to health maintenance organizations, and failed to provide the "best price" information, thus avoiding their obligation to pay additional rebates to state Medicaid programs.

A whistle-blower lawsuit led to the case against the German company Bayer for overcharging Medicaid for Cipro, the antibiotic recommended during the anthrax scare, and Adalat CC, a drug to treat high blood pressure. The settlement with British drug maker GlaxoSmithKline involved Paxil, an anti-depressant, and Flonase, which is used to treat allergies.

Dramatic increases in drug prices and tight state budgets are causing states to crack down on Medicaid fraud. North Dakota, Idaho, and Nebraska are the only states that do not have Medicaid fraud investigation units.


Department of Human Services' (DHS) Pharmacy Administrator Dr. Brendan Joyce, PharmD, at (701) 328-2321, or
Heather Steffl, DHS Public Information Officer, (701) 328-4933.
For national settlement details, contact the National Association of Medicaid Fraud Control Units at (202) 326-6020


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