HARRISBURG, Pa. (Legal Newsline)--Pennsylvania Attorney General Tom Corbett has announced a $6.95 million settlement with Abbott Laboratories.

The Abbott Park, Ill.-based drug company was accused of artificially inflating the price of drugs purchased by state-funded prescription drug programs.

The settlement announced last week requires the company to pay the money within five days to the Commonwealth of Pennsylvania, which will then distribute it between the Pennsylvania Medicaid Program, the PACE program (Pharmaceutical Assistance Contract for the Elderly) and the Pennsylvania Employees Benefit Trust Fund.

"This lawsuit was aimed at reversing a scheme that overcharged the taxpayers of Pennsylvania and Commonwealth agencies millions of dollars for prescription drugs," Corbett said. "This settlement returns that money to the Pennsylvania Medicaid Program and other prescription drug plans, where it will immediately be put back to work helping care for lower income residents, senior citizens and retirees."

The commonwealth received approximately $4.49 million for the artificially inflated drug prices, along with an additional payment of $1.3 million and $1.1 million in attorneys' fees.

Roughly 70 percent of the settlement will go to the Pennsylvania Department of Public Welfare, which oversees the commonwealth's Medicaid program. The remaining 30 percent will then be disbursed to the PACE and PEBTF programs.

The settlement also requires Abbott to provide detailed drug pricing information to the three programs.