Aventis to pay nearly $100 million settlement

WASHINGTON: Drugmaker Sanofi-Aventis has agreed to pay nearly $100 million to settle allegations it cheated Medicaid on the cost of nasal sprays.

The Justice Department said Aventis Pharmaceutical Inc., a wholly owned subsidiary of Sanofi-Aventis US LLC, has agreed to pay the government $95.5 million to settle the charges.

The government charged that between 1995 and 2000, Aventis and its corporate predecessors did not offer Medicaid the best prices for the sprays Azmacort, Nasacort and Nasacort AQ.

Medicaid is a state and federally funded health care program for the poor.

In reaching the settlement, Sanofi-Aventis US did not admit any wrongdoing. The company, based in Bridgewater, New Jersey, issued a statement saying it believed the old pricing system was legal.

The global parent firm is based in Paris and has 100,000 employees operating in more than 100 countries.

Michael Loucks, the US Attorney for Massachusetts, said the government will vigorously investigate those who scam the Medicaid system.

Under the law, the company was required to tell Medicaid the lowest price that it charged companies for those products, and offer state Medicaid programs rebates based on those prices.

Prosecutors contend that in order to dodge that obligation, Aventis entered into a private deal with the HMO Kaiser Permanente that repackaged Aventis drugs under a new label, allowing them to overcharge Medicaid programs for the same product.

From the $95.5 million settlement, the US government will get slightly more than half. More than $40 million will go to the states providing Medicaid, and over $6 million to public health service firms that paid inflated prices.

The settlement comes days after another unit of the company won a $190 million contract from the US government to make a swine flu vaccine.

The Justice Department earlier this month accused Wyeth, one of the nation's biggest drugmakers, of cheating Medicaid programs out of hundreds of millions of dollars by overcharging for a stomach acid drug. Wyeth defended its pricing plan, saying its pricing calculations were correct.