Office of the Attorney General
Attorney General Conway Announces $4.5 Million Settlement With Par Pharmaceutical, Inc.

Press Release Date:  Friday, August 26, 2011  
Contact Information:  Shelley Catharine Johnson
Deputy Communications Director
502-696-5659 (office)

Attorney General Jack Conway today announced a $4.5 million settlement with pharmaceutical manufacturer Par Pharmaceutical, Inc. over allegations the company published grossly inflated average wholesale prices for its drugs. Headquartered in Woodcliff Lake, NJ, Par is the fifth largest U.S. based generic pharmaceutical company manufacturing and marketing more than  60 generic versions of popular branded drugs such as Alprazolam (generic for Xanax), Buspirone (generic for BuSpar), Fluoxetine (generic for Prozac), Ranitidine (generic for Zantac) and Risperidone (generic for Risperdal). 

 The Kentucky Medicaid program relies on published average wholesale prices (AWPs) to determine how much to pay pharmacies when they fill prescriptions for Medicaid recipients.  The AWPs that Par published for its drugs were significantly inflated and bore no relationship to any prices that Par actually charged any of its customers.  This created an artificial “spread” between the false and inflated published prices and the real prices.   Some of these spreads exceeded 7,000%. 

Par then used these spreads as a sales tool to market the drugs to its customers, thereby increasing Par’s profits and its market share in the pharmaceutical industry at the expense of Kentucky taxpayers.  These deceptive practices caused the Kentucky Medicaid program to pay substantially more for Par’s drugs than they actually cost Kentucky pharmacies to acquire them. 
“This type of deceptive practice by some drug companies not only undercuts a valuable state program, it harms taxpayers and drives up health costs for everyone,” General Conway said. “I am pleased that were able to recover this money on behalf of the Medicaid program and Kentucky taxpayers.”

The United States Department of Justice has already settled the federal claims against Par. Kentucky will retain the entire $4.5 million of the settlement proceeds.  This settlement is the latest in a number of settlements in lawsuits filed by the Office of the Attorney General against 46 major drug companies. 

Since Attorney General Conway took office in January 2008, his Office of Medicaid Fraud and Abuse Control has recovered or been awarded more than $210 million for the state and federal Medicaid programs.  These cases range from lawsuits and settlements against pharmaceutical companies to cases against individual providers.

A settlement is not an admission of liability in a civil case. The Attorney General’s Tip Line for reporting allegations of Medicaid fraud is 1-877-228-7384.