updated 10/19/2009 3:47:20 PM ET 2009-10-19T19:47:20

Mylan Inc. and two other drugmakers will pay $124 million to settle claims they did not properly reimburse Medicaid for drugs, officials said Monday.

New York Attorney General Andrew Cuomo said two Mylan subsidiaries, along with one division of AstraZeneca PLC and part of Johnson & Johnson, violated the False Claims Act. Mylan, which is based in Pittsburgh, said it will pay $121 million. Mylan's estimate is $3 million greater than Cuomo's due to interest payments.

Between 2000 and 2004, Medicaid bought drugs from the companies, and the drugmakers reimbursed Medicaid once per quarter. But the companies underpaid by pricing the drugs at a lower rate, Cuomo's office said.

Medicaid classifies some products as "innovator" drugs, which get higher rebates than "non-innovator" drugs. The government said Medicaid was paying innovator rates to the companies, and the drugmakers were reimbursing Medicaid at the lower non-innovator prices.

The settlements resolve all claims between the federal and state governments and the drugmakers. Mylan said its Mylan Pharmaceuticals and UDL Laboratories businesses acknowledged no wrongdoing, and the company said it will take an $83 million charge in the third quarter as a result of the settlement.

Mylan said, however, it will try to recover "a substantial portion" of the $121 million from third parties that received overpayments after they supplied Mylan with "innovator" drugs to be sold as generics.

Cuomo's office said Mylan made insufficient reimbursements to Medicaid for drugs for pain, angina, arrhythmia, Parkinson's disease and other ailments. AstraZeneca Pharmaceuticals will pay $2.6 million to resolve allegations it underpaid its rebates on the respiratory drug Albuterol, and J&J's Ortho McNeill Pharmaceutical will pay $3.4 million to end allegations related to the topical steroid Dermatop.

States involved in the investigation included New York, New Hampshire, and Ohio. Cuomo's office said New York will get $18.4 million from the settlement.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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