WASHINGTON – According to the Justice Department, four pharmaceutical companies will pay $124 million to resolve claims of Medicaid fraud.

Mylan Pharmaceuticals, UDL Laboratories, AstraZeneca Pharmaceuticals and Ortho McNeil Pharmaceutical have signed settlement agreements focusing on violations of the False Claims Act, which claimed they failed to pay appropriate rebates to state Medicaid programs for drugs.

"The settlement with Mylan and UDL is the largest healthcare fraud recovery that the U.S. Attorney’s Office in New Hampshire has ever obtained," said John P. Kacavas, U.S. Attorney for the District of New Hampshire. “The settlements show that the government is committed to identifying healthcare fraud and ensuring that companies that benefit from doing business with the government agree to play by the rules."

The Medicaid Prescription Drug Rebate Program was enacted by Congress in 1990 out of concern for the costs that Medicaid was paying for outpatient drugs.

By participating in the rebate program, the four companies agreed to pay quarterly rebates to Medicaid that were based upon the amount of money that the healthcare program paid for each company’s drugs. The amount of a rebate is determined in part by whether a drug is considered an "innovator" or a "non-innovator."

The settlements resolve allegations that the companies sold innovator drugs that were manufactured by other corporations and had been classified as non-innovator drugs. The improper classification of these drugs allegedly enabled the companies to pay smaller rebates.

Mylan and UDL agreed to pay $118 million to resolve allegations involving several drugs from each company. AstraZeneca will pay $2.6 million to resolve allegations that it underpaid its rebate obligations with respect to Albuterol. Ortho McNeil will pay $3.4 million to resolve allegations that it underpaid its rebate obligations with respect to Dermatop.

"The Civil Division will continue to work with our state partners to ensure that Medicaid programs, which provide healthcare to more than 58 million Americans, receives the same discounts that any larger insurer gets," said Tony West, Assistant Attorney General for the Civil Division. "These cases exemplify the strong cooperation between the Department of Justice and the states in protecting American taxpayers."

The case was brought under the False Claims Act, which allows for private persons to file suits on behalf of the government. The whistleblower, Ven-A-Care, a corporation located in Key West, Fla., will receive almost $10.8 million as its share of the recovery.