Hi-Tech Pharmacal Co. to Pay $25 Million in Settlement with Texas AG for Medicaid Fraud


The Texas Attorney General announced on January 7, 2013 that New York pharmaceutical company Hi-Tech Pharmacal Co. will pay the state of Texas and the federal government a combined $25 million to settle the government’s claims that Hi-Tech overcharged the Texas Medicaid program for prescription drugs.

Texas law requires drug manufacturers to submit reports to Medicaid disclosing the prices that they charge pharmacies, wholesalers, and distributors.  Texas alleged that, from 1995 to 2013, Hi-Tech knowingly submitted inflated pricing information for certain prescription drugs, which caused Medicaid to over-reimburse pharmacies.

The parties struck an agreement on December 19, 2013, which requires Hi-Tech to pay the government a combined $25 million and reimburse the Texas Attorney General for investigative and legal costs incurred. The parties agreed that the settlement represents only a compromise on the disputed issues and “is neither an admission of any facts or liability by Hi-Tech, nor a concession by the State that the State’s allegations and claims are not well-founded.”

Texas will recoup approximately $11.2 million for its share of the settlement.  The Texas Attorney General’s press release is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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