Glenmark Pharmaceuticals on Wednesday said its US-based subsidiary Glenmark Generics Inc has agreed to settle the pricing investigation with the Texas Attorney General under the Texas Medicaid Fraud Prevention Act (TMFPA) by paying $25 million (around Rs 155 crore) over a period of four years.
Glenmark Pharmaceuticals on Wednesday said its US-based subsidiary Glenmark Generics Inc has agreed to settle the pricing investigation with the Texas Attorney General under the Texas Medicaid Fraud Prevention Act (TMFPA) by paying $25 million (around Rs 155 crore) over a period of four years.
In a statement to BSE, the company said, "Our subsidiary Glenmark Generics Inc, USA, has concluded the pricing investigation by the Texas Attorney General, USA. Under the terms of the agreed settlement, there is no admission of liability. Glenmark Generics will make a payment in 16 equal payments of $1.56 million (nearly Rs 9.71 crore) each quarter for the next 16 quarters to the state of Texas."
Robert Matsuk, president, North America and global API business, Glenmark said the settlement amount will not materially impact the organisation's cashflow. "We remain committed to continuing our mission of providing our customers with the finest generic pharmaceutical products in the US and complying with all applicable state and federal pricing requirements," he said in the filing.
Under the settlement agreement, Glenmark must pay the State of Texas a total of $11.25 million for the State's general revenue fund. "Because the Medicaid program is jointly funded by the State and US taxpayers, the federal government is entitled to a percentage of the settlement proceeds. The federal government's share is also $11.25 million. Additionally, the Texas Attorney General's Office will receive $2.5 million in attorneys' fees and costs," the statement added.
The Texas Attorney General's Civil Medicaid Fraud Team has investigated dozens of pharmaceutical manufacturers for fraudulantly reporting inflated drug prices to the Medicaid program since 2000. In August 2012, the state launched an investigation against Glenmark for possible violations of the TMFPA where it was found that since 2005, Glenmark violated Texas law by illegally misreporting prices to Medicaid in order to induce pharmacies and other providers to purchase Glenmark's products over its competitors' products. As a result, Medicaid reimbursed pharmacies more than it should have for certain of Glenmark's products.
According to a pharma analyst, this is negative for the company but not a significant one, as the quarterly settlement payments would only marginally impact the company's bottomline.
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