Ranbaxy Medicaid Prices Questioned by Justice Department

Indian generic drugmaker Ranbaxy Laboratories Ltd. was questioned by the U.S. Department of Justice on how it reports pricing data for medicines it sells through Medicaid, the U.S. health program for the poor.

The Justice Department has requested documents and information through what is called a civil investigative demand. The inquiry doesn’t allege wrongdoing or propose a fine, the Gurgaon, India-based company said in a statement today. Ranbaxy said it would cooperate.

Ranbaxy is being bought by Sun Pharmaceutical Industries Ltd. It has been hurt by import bans on four of its Indian facilities and increased regulatory costs. This year it also received a subpoena from the U.S. Attorney for the District of New Jersey requesting documents related to its banned ingredient factory in Toansa.

Medicaid is a joint state-federal program covering 66 million low-income Americans, according to the Kaiser Family Foundation. It was expanded under the Patient Protection and Affordable Care Act, also known as Obamacare. Drugmakers give the program a discount on their products based on what they sell the drugs for elsewhere. It’s up to drugmakers to report data that sets the discounts.

Ranbaxy has faced several other inquiries from U.S. authorities that have cost the drugmaker.

The state of Texas resolved a Medicaid fraud investigation against Taro Pharmaceutical Industries Ltd., a unit of Sun Pharma, for fraudulently reporting inflated drug prices to the Medicaid program, according to an Aug. 11 statement. The drugmaker paid $19.5 million to the state and the U.S.

In July, Ranbaxy reported a quarterly loss on a one-time provision of 2.4 billion rupees ($39 million) because of settlement talks with the U.S. government, without elaborating on the subject of the talks.

Last year, the drugmaker agreed to pay $500 million to resolve fraud allegations made in a whistle-blower’s lawsuit and federal criminal charges that the company sold adulterated drugs while lying about it to U.S. regulators.

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