SALT LAKE CITY — Utah has received $3.5 million in settlements with two pharmaceutical companies for allegedly inflating the cost of prescription drugs sold to the state Medicaid program, Attorney General Mark Shurtleff said Thursday.
Under the settlements, the state received $3 million from Mylan Inc. and $500,000 from Schering Corp. and Warrick Pharmaceuticals Corp. An additional $1 million could be paid to the state if a pending appeal before the Utah Supreme Court is reversed.
"We are fighting a system that has for years forced Utahns and the state of Utah to pay millions more for prescription drugs," Shurtleff said. "We hope this settlement is a bitter pill for these renegade drug companies."
Utah reportedly spent $1.8 billion on Medicaid and $155 million for the drug program in fiscal 2010. The Utah Attorney General's Office estimates the state paid 250 percent more than it should have for every dollar spent on generic drugs and was overcharged 11 percent for brand-name prescription drugs.
"We believe this is fraud," Shurtleff said. "This is fraud on the public and on the state of Utah."
Utah has sued more than 60 drug companies for reporting false and inflated average wholesale prices for certain outpatient drugs. Those reported prices are used to set the amount Medicaid pays for the drugs when patients fill their prescriptions at Utah pharmacies, the attorney general said.
"This is just the beginning of these cases," Shurtleff said. "We have a couple settlements coming (worth several millions of dollars) in the very near future."
Senate President Michael Waddoups, R-Taylorsville, said Utahns have been paying "over-the-top prices for under-the-counter drugs."
"Medicaid fraud hurts Utah’s taxpayers and Medicaid recipients,” said Waddoups, who joined Shurtleff and House Speaker Becky Lockhart at a news conference at the state Capitol to announce the settlements. "It is outrageous for drug companies to take advantage of taxpayers when budgets are already suffering."
Waddoups cited three examples of such "outrageous" markups from previous lawsuits.
• The drug Finasteride, approved in 1992 as a treatment for benign prostatic hyperplasia and in 1997 for the treatment of male pattern baldness, costs drug companies roughly 1 cent per pill to manufacture but had a reported price of $3.13 — a markup of 31,000 percent.
• Amitriptyline with Perphenazine, used to treat major depression, was marked up 10,388 percent — from .0025 cents to roughly .26 cents.
• And Isosorbide Nononitrate, a drug used to prevent or treat chest pain that costs 2 cents to manufacture, was marked up to $1.12, or 5,600 percent.
Since 2007, the Utah Medicaid Fraud Control Unit has negotiated more than $47.5 million in settlements with drug companies. As part of the Utah Attorney General's Office, the unit has opted to litigate directly with pharmaceutical companies rather than wait to join federal legal action.
Waddoups and Lockhart both praised Shurtleff and the Utah Medicaid Fraud Control Unit for holding drug companies accountable for defrauding Utah taxpayers.
"We need to do everything we can to make sure these drug companies are not taking advantage of the sick and the elderly, as well as the taxpayers," said Lockhart, R-Provo.
Waddoups said money from the settlements announced Thursday, along with future settlements, will be returned to the state's general fund. The Legislature's intention, he said, is to put that money toward programs that benefit those in need.