Pfizer, GSK, J&J and more strike $248M deal to exit long-running Medicaid fraud suit

People shaking hands across a desk that has computer and papers on it
Fifteen drugmakers including GlaxoSmithKline, Pfizer and Johnson & Johnson will pay a combined $248 million to exit Illinois Medicaid fraud suit. (Pixabay)

After 14 years of litigation, a slew of drugmakers—including several Big Pharma giants—are finally settling a protracted battle with the state of Illinois over claims they fudged wholesale drug prices to increase Medicaid reimbursements.

For Pfizer, GlaxoSmithKline, Johnson & Johnson and a handful of others, the bill tallies up to $248 million. 

The group of 15 drugmakers, which includes several subsidiaries of larger companies, will resolve their end of a long-running Illinois probe into claims the companies "published inflated average wholesale price information to induce state Medicaid programs to increase their reimbursement amounts," state Attorney General Kwame Raoul's office said in a statement.


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Medicaid reimbursements are based on those averages, which companies calculate themselves and report to the government health program.

The settlement will close out a 2005 lawsuit originally filed by then-Attorney General Lisa Madigan against 46 drugmakers. In all, the state of Illinois has netted a combined $648 million over the course of that litigation, according to Bloomberg. 

As part of the deal, GlaxoSmithKline will pay $54.6 million, Johnson & Johnson will pay $49.5 million and Pfizer will pay a total of $60 million, including almost $19 million via its Pharmacia subsidiary. The other drugmakers involved in the settlement are Novartis, Abbott Laboratories, AbbVie, Sanofi subsidiary Aventis; Allergan subsidiary Forest Laboratories; B Braun and TAP Pharmaceutical Products.

RELATED: Teva shells out $135M to wrap Illinois AG's Medicaid pricing fraud suit

Those three large-cap drugmakers are only the latest to settle in the Illinois suit. In January, Teva agreed to wrap up claims it faced in the lawsuit for $135 million. 

The combined settlement is one of the largest this year. But for J&J, it could be a pittance compared to what the drugmaker faces in a reported opioid deal. 

Last week, J&J reportedly offered $4 billion to settle a raft of state and local lawsuits over its sales of generic opioid products. The "framework" deal J&J pitched to five state attorneys general and a group of local plaintiffs also includes a $23 billion offer from Teva––mostly tied to donated drugs valued at their list prices rather than the drugmaker's cost. 

If that deal passes muster, it would become the single largest settlement ever inked by a drugmaker. 

RELATED: Medicaid misclassification bill inspired by EpiPen snafu passes Congress

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