Drugmaker Actavis settles price-inflation case

Facing the possibility of losing its right to sell pharmaceuticals to 3 million Texas Medicaid patients, drugmaker Actavis and its subsidiaries have agreed to pay $84 million to settle allegations of price inflation without admitting wrongdoing.

Actavis, which has U.S. headquarters in Morristown, N.J., and a corporate parent in Reykjavik, Iceland, lost a three-week jury trial last February in Texas and could have lost its ability to participate in Texas' Medicaid program if the conviction were upheld on appeal, according to the settlement agreement (PDF).

The allegations stemmed from a 2008 lawsuit filed in Texas by Ven-A-Care of the Florida Keys, which has been a plaintiff in other large whistle-blower suits involving drug prices. The lawsuit said the company had been manipulating its drug-pricing information to inflate reimbursements from public insurance programs in Texas since 1991.

The settlement stipulates that Actavis denies the allegations and any related liability from the jury trial. In an e-mailed statement from a spokesman, Actavis CEO Doug Boothe said the company was pleased to have resolved the matter and will continue selling products to millions of Texans who receive Medicaid.

"We elected to settle this case rather than pursue an appeal of the jury's decision in order to secure this favorable outcome and to ensure that Texas' Medicaid patients may continue to benefit from our medications," Boothe said in the statement.

Abbott's office said in a news release that the settlement would avert a lengthy appeals process that would "ultimately delay timely reimbursement to the state treasury."

The state lawsuit came eight years after Ven-A-Care filed federal False Claims Act litigation against a firm making similar allegations. The Texas settlement says the $84 million payment is intended to settle all claims relating to the conduct described in the state and federal lawsuits and that Ven-A-Care has agreed to drop its claims in the federal case as a result.