After nearly a decade of legal squabbling, Eli Lilly was ordered by a federal court jury to pay $61 million for shortchanging the Medicaid drug rebate program, the latest instance in which a drug company was accused of skimping on payments.
The company had been accused of failing to pay rebates from 2005 to 2016 and, consequently, making false statements to the U.S. Centers for Medicare and Medicaid Services about the prices it charged distributors for its drugs. The jury decided that Lilly intentionally underpaid rebates, resulting in a loss for the federal government program and Medicaid agencies in 26 states.
Under federal law, drugmakers are required to pay quarterly rebates to state Medicaid programs in exchange for coverage of their medicines. CMS calculates the rebate based on the so-called average manufacturers price, or AMP, which is the amount that a drugmaker receives from its distributors. A higher AMP means that the drug company must pay a higher rebate.
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