Medicaid Fraud Case Gets Settled

Filled under: Healthcare Compliance on October 2012

No less than $16 million will be received by North Carolina state from a national Medicaid fraud settlement. The case involves one of the largest drug makers in the United States.

Since Abbott Laboratories agreed to pay the money, the Food and Drug Administration (FDA) dropped all charges against the company. The famous drug manufacturer was accused of promoting Depakote for unapproved uses. The Food and Drug Administration has approved Depakote only for bipolar mood disorder and seizures control. Nevertheless, Abbott Laboratories did not limit their publicity to those particular uses.


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Federal prosecutors claimed that Abbott Laboratories have promoted Depakote as an efficient treatment for schizophrenia, agitated dementia and autism, too. According to the law, even though doctors can prescribe legal drugs for uses that have not been approved by the FDA, companies are banned from promoting them for such additional uses. 

Most of the money that Abbott Laboratories paid will be used to found the state’s Medicaid program. About $1 million from the sum will be invested in the support of public schools. Consequently, $14.8 million will go to Medicaid efforts support.

The settlement with Abbott Laboratories is just one of the many similar cases recorded in the past few years. A report launched by Public Citizen group back in September, 2012, indicated that the number of fraud cases in the United States medical system has much increased. The same report showed that more than $30 billion have been collected by prosecutors for settling alleged fraud allegations against drug companies.


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The law in the United States indicates that drug companies are allowed to launch new products only if they have been approved by the Food and Drug Administration. Drugs can be used and promoted just for the uses FDA has accepted. However, in the past few years numerous cases of companies promoting their medications for other uses, as well, have been registered. State attorneys have perused all cases which involved promoting drugs for unapproved uses.

However, it has been debated that federal prosecutors settle Medicaid fraud cases too easily. Penalties are given due to unlawful promotion of drugs, but companies get away easier than they should. GlaxoSmithKline, Johnson & Johnson, but also Abbott Laboratories have paid alone more than $3.1 billion in settlements.

In the video below you can find out more on how GlaxoSmithKline has several times been prescribed for uses that have not been approved by the FDA.

It surely looks like in many cases prosecutors have decided to settle cases with companies which violated Medicaid and FDA regulations. Thanks to the money obtained under these agreements, the state has made quite a fortune. Compliance with healthcare fraud regulations and actually with all rules that function in the healthcare industry is highly important. In case such regulations are not respected, providers will have to respond in court.

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