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Medicaid rebates by camouflaging what are indisputably reductions on the pnce of drugs

masquerading as a "rebate" paid after the purchase of the drug.

239.

Accordingly, the Defendant Manufacturers violated federal law that requires drug

makers who have agreed to participate in the Medicaid Program to include all discounts, cash

terms, rebates, and free goods in their calculation of "best price."

240.

Each

of the

Defendant

Manufacturers

has

intentionally

and

routinely

failed

to

report accurate best price information as required by federal Medicaid law, and thereby deprived

the States of their proper rebates. 42 U.S.C. §1396r-8.

B.

THE DEI'ENDANT MANUFACTURERS' FRAUDULENT PRICE REPORTING GIVES RISE To A CAUSE OF ACTION UNDER THE REVERSE FALSE CLAIMS ACT PROVISIONS

241

.

What is commonly known as the reverse false claims provision of the federal

False Claims Act provides in pertinent part:

(a)

Liability for certain acts. Any person who--

(7)

knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to payor transmit money or property to the Government, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $11,000, plus 3 times the amount of damages which the Government sustains because of the act of that person

31 U.S.C. §3727(a)(7).

242.

As

set

forth

above,

the

Medicaid

Rebate

Act

mandated

that

the

Defendmlt

Manufacturers comply with their Rebate Agreements with the government and to truthfully

calculate and report their average monthly prices and best prices to the Secretary on a quarterly

basis. 42 U.S.c. §1396r-8(b)(3)(A)(i).

243.

The

Defendant Manufacturers

knew that

their

reported

pricing

data was

relied

upon by the government to compute the amount of the rebates the Defendant Manufacturers

65

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