According to the Houston Chronicle, Texas is suing three drug companies alleging the companies took advantage of the Medicare system and cost the state tens of millions of dollars in overpayments.

The lawsuit was filed against Sandoz, Inc. of New Jersey, Mylan Laboratories of Pennsylvania and Teva Pharmaceuticals, Inc., along with some of their subsidiaries. Texas Attorney General, Greg Abbott, alleged the companies sold Medicaid-covered drugs to large retailers at deep discounts that were not reported to the state. The Texas Medicaid program sets their reimbursements for drugs based upon prices which are disclosed by the drug manufacturers. The failure of the drug companies to report the discounts resulted in the state’s overpayment for drugs. The retailers are not named in the suit because they are not required to disclose their drug prices. The purpose of the discounts was to encourage retailers to purchase drugs from these companies, thus increasing their profit.

Read the full article here.

Bo Frith