Jackson, MS-Attorney General Jim Hood today announced that the State of Mississippi will collect $3.9 million in a settlement with Dey Labs of Napa Valley, California for overcharges to the state’s Medicaid program.

The agreement is the first in the Average Wholesale Price litigation (“AWP”) against 54 named defendants.

“This lawsuit was initiated by my office to stop the pharmaceutical industry from overcharging the Mississippi Division of Medicaid for drugs prescribed and dispensed to this state’s most needy citizens, the elderly, the poor and the disabled. And also to recoup all of the lost tax dollars Mississippi citizens were wrongly forced to pay to the pharmaceutical companies as a result of their fraudulent sales practices on our Division of Medicaid,” said Attorney General Hood.

This settlement reimburses the state of Mississippi’s Division of Medicaid for all overcharges by Dey Lab pharmaceuticals and all expenses associated with this portion of litigation. All attorneys’ fees have been paid by Dey Labs separate and above the $3.9 million agreement.

Mississippi is one of approximately 26 states, in addition to the federal government, that are pursuing these fraud claims against the pharmaceutical companies for reporting false prices to the state and federal government—prices that were known to be relied upon by the state and federal Medicaid programs when reimbursing pharmacies for Medicaid drug prescriptions. The evidence in these cases has revealed that the pharmaceutical manufacturers reported prices inflated as much as 1200% over their actual costs. There is further evidence that $ .78 of every dollar spent on pharmaceutical drugs landed in the pockets of the pharmaceutical companies, not the pharmacists or the hospitals that dispensed these drugs. This resulted in millions of dollars in overcharges to the Mississippi Division of Medicaid.

Mississippi is continuing to pursue the fraud claims against the remaining Defendants.

Click Here to view the DEY complaint.

Click Here to view the DEY settlement.