By Brendan Pierson

(Reuters) -Texas Attorney General Ken Paxton accused (NYSE:) and its supplier Tris Pharma of providing children's ADHD medicine that it knew might be ineffective to the state's Medicaid insurance program for low-income people, in a lawsuit unsealed on Monday.

The lawsuit, filed in Harrison County, Texas District Court, alleges that Pfizer and Tris manipulated quality-control testing for the drug Quillivant XR in order to obtain passing results from tests it was required to perform under federal law between 2012 and 2018. Properly done tests frequently showed that the drug failed to dissolve as it was supposed to, a sign that it would not be released in the body as expected, the lawsuit said.

The lawsuit also alleged that Pfizer, despite knowing of the quality-control issues, persuaded Texas' Medicaid program to add Quillivant to its list of preferred drugs.

Paxton alleged that many Texas families complained that Quillivant failed to work.

"I am horrified by the dishonesty we uncovered in this investigation," Paxton, a Republican, said in a statement. The lawsuit accuses the companies of defrauding the state's Medicaid program, and seeks unspecified money damages from the companies.

Pfizer said in a statement that it had examined the allegations in the complaint on "multiple occasions" and "did not find any impact on the safety of the product." It said it believed the case had no merit and would move to dismiss it.

A spokesperson for Tris said in an email: "We categorically deny and intend to rigorously defend these allegations in the court of law."

Tris manufactured Quillivant for Pfizer until 2018, when it acquired the product from Pfizer.

The lawsuit stems from a whistleblower complaint by Tarik Ahmed, who worked as Tris' head of technology from 2013 to 2017.

Quillivant was developed by Nextwave Pharmaceuticals, a company acquired by Pfizer in 2012.

Like other drugs for attention deficit/hyperactivity disorder, it has been plagued by shortages, and never achieved a large national market share. Tris acquired the product in 2018.

The U.S. Food and Drug Administration in 2017 warned Tris of manufacturing lapses.

In its 2022 annual report, Pfizer said it had received a subpoena from federal prosecutors in the Manhattan-based Southern District of New York related to its relationship with Tris and the production of Quillivant in 2018, but had not heard anything further after responding.