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Jilted King to pay $124 million settlement
Wednesday, November 02, 2005

King Pharmaceuticals Inc., the brand-name drug maker left at the altar by Mylan Laboratories amid concerns about its bookkeeping and the price Mylan was paying, has agreed to pay more than $124 million to resolve claims it charged federal and state governments too much for its drug products, the Justice Department said yesterday.

Bristol, Tenn.-based King, which in 2004 had agreed to be purchased by Canonsburg-based Mylan for $4 billion only to see the deal fall apart last spring, is the latest drug maker to settle allegations of deceptive pricing first raised by whistleblowers.

The settlements exceed $3.1 billion, with several more drug companies still in Justice's crosshairs. Mylan, for example, disclosed in January that its Medicaid drug rebate calculations were under investigation.

More recently, Mylan was among three companies sued by Florida for allegedly reporting inflated prices for drugs sold to Medicaid patients, depleting the state of limited Medicaid funds. Mylan faces similar complaints in New York, Massachusetts, Kentucky, Wisconsin and Alabama.

In the King case, the Justice Department said the company engaged in "systemic and widespread misreporting" of its drug prices to the Medicaid program for low-income Americans, the Veterans Administration and other government programs over nine years from 1994 to 2002. The company agreed to pay $124 million plus interest.

The allegations involve complicated pricing structures that are intended to ensure that the government pays no more than the best price drug makers negotiate with private customers.

Edward Bogart, the former King employee who filed suit under the federal False Claims Act, said the company abused the government's pricing setup.

Brian A. Markison, King's president and chief executive officer, said there was no "intentional misconduct." He said the company has "taken the necessary steps to avoid any recurrences."

Mr. Bogart's share of the settlement has yet to be determined, but the false claims law rewards whistleblowers with 15 percent to 25 percent of the settlement, Bogart's lawyers said in a statement.

"Drug companies have a duty and responsibility to ensure that the prices they report on their drug products are truthful and accurate," said Assistant U.S. Attorney General Peter Keisler.

Federal and state officials are looking into 150 price and marketing fraud cases involving more than 500 drugs, Mr. Keisler has said.

First published on November 2, 2005 at 12:00 am
The Post-Gazette and The Associated Press contributed to this report.