The Associated Press

AUGUSTA, Maine - A subsidiary of Omnicare Inc., will pay more than $1 million to settle allegations it illegally filled some prescriptions with a pricier drug to bolster company profits.

Attorney General G. Steven Rowe had accused Omnicare Pharmacy of Maine of defrauding the state's Medicaid program by switching patients from a cheaper tablet form of the anti-ulcer drug Ranitidine to the more expensive capsule form without doctors' prescriptions. The drug is the generic form of Zantac.

"The reason this was done was to increase corporate profits," Rowe said at a news conference.

Omnicare Pharmacy of Maine, a subsidiary of Covington-based Omnicare, rejected the state's allegations and noted that the settlement includes no admission of wrongdoing. The company said it only settled to avoid costly litigation.

Rowe said the investigation began when state officials noticed a sudden spike in claims for Ranitidine capsules, which corresponded to a similarly sharp drop in the number of claims for the cheaper tablets.

MaineCare, the state's Medicaid program, paid $15.10 per month for the drug in tablet form and $82.77 per month in capsule form, a difference of $67.67. The tablets were cheaper because their price was capped by the federal government, state officials said.

The complaint said that in 267 cases, Omnicare created false telephone prescription orders that were sent to residential care facilities. It also sent out letters and faxes to prescribers recommending the switch, saying it would benefit payers, the state said.

More than 1,200 reimbursement claims were illegal because prescribers did not authorize them or authorized them based on misrepresentations, according to the investigation, which focused on the period from January 2000 to June 2001.

Omnicare will pay $1.08 million in fines, damages and costs under the settlement. As part of the total, MaineCare received full restitution - which amounts to $198,188.

The company also agreed to provide training and oversight to prevent similar violations in the future.

Omnicare Maine spokesman Andy Brimmer said patient safety was never in question and that the company agreed to the settlement to avoid an expensive, protracted legal battle. He said the company cooperated with the state's investigation.

In trading Wednesday, Omnicare Inc.'s shares closed up $1.26 at $28.85.