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State settles with drug maker over Medicaid fraud charges

October 20, 2014

The Indiana attorney general’s office has recovered more than $181,000 for the Indiana Medicaid program by joining with other states and the federal government in a fraud settlement with the drug manufacturer Organon Pharmaceuticals USA Inc.

The combined settlement – which resulted from two whistleblower lawsuits – resolves allegations that Organon underpaid rebates to the state, offered improper financial incentives to nursing home pharmacies, promoted two of its antidepressants for unapproved uses and misrepresented its drug prices to the Indiana Medicaid program to reap larger margins and increased sales.

Organon was headquartered in the Netherlands and the company’s assets now are owned by Merck.

“Taxpayers are the victims whenever a drug company causes false claims to be submitted to Indiana Medicaid for its products,” Indiana Attorney General Greg Zoeller said in a written statement. “Settlements resulting from whistleblower lawsuits are among the tools my office uses with our counterparts in other states to recover overpayments for false claims and restore funds to the Medicaid program so they can be put to their appropriate use.”

The attorney general’s Medicaid fraud control unit participated in the multistate and federal investigation.

Organon will pay $31 million to settle the lawsuits with the states and the federal government.  Of that, Indiana Medicaid will receive $162,346 in a settlement arising from a whistleblower lawsuit filed in Massachusetts and $19,016 in a settlement arising from another whistleblower suit filed in Texas, for a total recovery of $181,362 to Indiana Medicaid.

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