BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley has reached a settlement with a New Jersey-based pharmaceutical manufacturer over alleged false and inflated price reports.

Actavis Elizabeth LLC agreed to a $3.6 million settlement over its reports to drug industry price reporting services that caused, Coakley claims, the Massachusetts Medicaid Program to pay inflated amounts for ingredient costs on prescriptions for Medicaid recipients.

"The Massachusetts Medicaid Program provides critical health care services to thousands of Massachusetts residents," Coakley said.

"This settlement represents a positive step forward in our efforts to address false price reporting, an issue that continues to afflict the program.

"Our office will continue to work with MassHealth and the federal government to maintain the integrity of the pharmaceutical reimbursement program and ensure that it is fair to all involved parties."

Actavis was sued in 2003 as part of a group of 13 generic drug manufacturers for alleged false inflation of the prices they reported to national pharmaceutical price reporting services.

Those reported prices were used by the commonwealth's Medicaid Program to determine what would be paid to pharmacies for ingredient costs in connection with prescription drugs.

The false and inflated prices, the commonwealth alleged, caused the Medicaid Program to pay inflated amounts for ingredient costs for prescriptions for Medicaid recipients.

The settlement resolves claims against Actavis related to drugs manufactured and sold from 1997-2003, including Clonazapam, Isosorbide Mononitrate and Lorazapam. Actavis did not admit any wrongdoing in agreeing to the settlement and asserted that its price reporting was consistent with all legal standards.

Actavis, which was formerly known as Purepac Pharmaceutical Co., is a subsidiary of Actavis Group hf, an Icelandic firm that manufactures and sells generic drugs worldwide.

Nine other defendants in the case - Dey, Inc.; Barr Laboratories, Inc.; Duramed Pharmaceuticals, Inc; Ethex Corporation; Roxane Laboratories, Inc.; Teva Pharmaceuticals USA, Inc.; Ivax Corporation; Watson Pharma, Inc., and Watson Pharmaceuticals, Inc. - have previously settled with the commonwealth for a total of $16.7 million recovered for the Massachusetts Medicaid Program. The case against three other defendants remains pending in federal courts in Boston.