South Dakota settles Medicaid fraud case

South Dakota settles Medicaid fraud case Attorney General Larry Long has announced that South Dakota's Medicaid program will recover over $260,000 from a multi-state settlement with two of the nation's pharmaceutical giants, Bayer Corporation and GlaxoSmithKline for violating the federal Medicaid drug rebate statute.

This law requires pharmaceutical companies to disclose their "best" or lowest price for sale of any product to any commercial buyer. The federal government uses these figures to calculate rebates owed to state Medicaid programs.

"Our state Medicaid program grossly overpaid these pharmaceutical companies as a direct result of this scam," said Long. "This settlement is critical to protect Medicaid programs, both in South Dakota and throughout the United States."

Both Bayer and GlaxoSmithKline sold products to HMOs at deeply discounted prices, and then avoided their obligation to pay additional rebates to the Medicaid programs. This was accomplished by repackaging these drugs under the HMO's private label. The fraud scheme is referred to as "lick and stick."

South Dakota, along with 48 other states and the District of Columbia, reached a total settlement of $330 million. South Dakota's share will go back to the state Medicaid program for reimbursement.

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