Thanks Mostly to J&J, Glaxo and Abbott, Feds and States Collecting Huge Medicaid Fraud Claims

Over the past decade, numerous drugmakers have reached settlements with the US federal and state governments after being accused of defrauding Medicaid programs. In general, there is an awareness that the numbers involved have been large, but what does the data really look like? A new report by Public Citizen, which last tracked this topic nearly two years ago, finds that states are settling more cases than ever and recovering taxpayer money at record amounts.

Specifically, the watchdog analyzed settlements that were reached since its last report was issued in late 2010 (read Pharma news here); in other words, the newest report tracks results between November 2, 2010, and July 18, 2012. What was found? There were 74 additional settlements totaling $10.2 billion in financial penalties that were reached.And the first half of 2012 alone represented a record year for federal and state recoveries – $5 billion and $1.6 billion, respectively.

“It should come as no surprise that states facing Medicaid budget shortfalls are finally deciding to root out fraud that likely has cost their taxpayers billions of dollars over the years,” study author Sammy Almashat says in a statement. “What this new report unequivocally shows is that those states that have chosen to hold the pharmaceutical industry accountable have largely seen their enforcement efforts pay for themselves.”

In fact, 17 states recouped the equivalent or more of their entire Medicaid fraud enforcement budgets with money from settlements. Arkansas, South Carolina, Alabama and Hawaii had the highest return on their investment, gaining between $12 and $84 for every dollar spent on Medicaid fraud enforcement, Public Citizen writes.

And three drugmakers – Johnson & Johnson (JNJ), GlaxoSmithKline (GSK) and Abbott Laboratories (ABT) – were responsible for two-thirds of the financial penalties paid to the federal and state governments during the most recent study period.

JNJ Chart

JNJ data by YCharts

The deals were broken down further by timeframe: there were 11 settlements totaling $1.1 billion that were announced during the last two months of 2010, and 44 deal worth $2.5 billion that were announced in 2011. And in the first six-plus months of this year, 19 settlements were announced that were worth the $6.6 billion mentioned above. When you combine the results of both reports, there were 239 settlements with drugmakers worth $30.2 billion since 1991.

To read the remainder of the article, go to Pharmalot.

Ed Silverman is the editor of Pharmalot and a contributor toYCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.

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