Kentucky reaches $6.5M settlement with drug maker over allegations of price inflation

Attorney General Jack Conway
Attorney General Jack Conway

Kentucky officials have reached a $6.5 million settlement with a Pennsylvania-based drug company following allegations of inflating average wholesale drug prices by as much as 8,000 percent.

Attorney General Jack Conway announced the settlement Friday with pharmaceutical manufacturers Mylan Laboratories Inc. and Mylan Pharmaceuticals Inc.

The bulk of the $6.5 million will be reimbursed to the state Medicaid program.

The problem in Kentucky arose because the state Medicaid program relies on published average wholesale prices to calculate Medicaid drug reimbursement rates. Mylan significantly inflated its rates.

This practice, Conway said in a news release, "caused the Kentucky Medicaid program to pay substantially more for Mylan's drugs than it actually cost Kentucky pharmacies to acquire them."

The Office of the Attorney General has filed suits against 46 major drug companies over average wholesale prices. Twenty have been settled.

According to the news release, Mylan is the largest U.S.-based generics manufacturer in the world, providing some 1,000 products to 150 countries.

The Attorney General's Tip Line for reporting allegations of Medicaid fraud is 1-877-228-7384.