Medicaid is a US health programme for families and individuals with low income and resources.
The alleged 26 sub-standard generic drugs were made at Ranbaxy's factories in Paonta Sahib and Dewas in India.
The company agreed to a $500 million settlement with the federal and state governments. About $266.7 million of that will go to Medicaid programmes that are jointly funded by federal and state taxes.
"Taxpayers expect their tax dollars to be used to pay for a legitimate service," Idaho Attorney General Lawrence Wasden said in a press release.
"This settlement reflects our resolve to address losses to the Idaho Medicaid programme caused by individuals and companies."
Idaho's share of the settlement is $419,914. About half of that will go to Idaho Medicaid as restitution, and about half will go to Idaho's general fund.
The company also pleaded guilty to seven felony counts of violating the US Food, Drug and Cosmetic Act and agreed to pay $150 million in criminal fines and forfeitures.