Healthy Skepticism Library item: 1012
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: news
Lawsuit Charges Drug Makers Stifled Competition
2003 Feb 13
Full text:
1010 WINS) (ALBANY) New York state Attorney General Eliot Spitzer on Thursday accused three major drug companies of providing financial incentives to doctors and pharmacists to favor their products.
Spitzer accused Pharmacia Corp., GlaxoSmithKline and Aventis of consumer fraud, commercial bribery and making false statements concerning wholesale prices to government-operated subsidized health plans. Spitzer said the inflated prices cost New York consumers and state government as much as $50 million to $100 million a year for the drugs, many of them used to treat cancer or to ease the side effects of chemotherapy.
Drug company officials said their practices are legal and said Spitzer and other states’ attorneys general were overreaching. California and Texas have similar suits pending.
The attorney general filed suits against Pharmacia and GlaxoSmithKline in state Supreme Court in Albany on Thursday. He expects to seek a claim in the “tens of millions of dollars.” A “pre-litigation notice” has also been sent to Aventis, he said.
Spitzer said the companies report an inflated “average wholesale price” to governments for their drugs. The difference between the inflated price reimbursed by governments and the lower price charged to health care providers can be pocketed by the providers, according to Spitzer. He said the “spread” is an enticement to choose those drugs over competitors, a claim the companies dispute.
“It is craven, it is wrong,” Spitzer said at a press conference in New York City. He said drug companies “will not pick the pockets of those who need pharmaceuticals to support their dividends and their CEOs’ outrageous salaries.”
He said the practices cost state $141 million on seven drugs in 2001. He said consumers would have saved another $28 million.
Spitzer said he’s unsure how many other companies might engage in the practice and wouldn’t comment on whether the physicians and pharmacists who participated would be investigated for their role. He said he is concerned patients weren’t given the most appropriate brand of medication, but has no testimony claiming a misdiagnosis.
Such a misdiagnosis or drug choice based on anything except exacting specifications could be deadly, said Dr. Paul A. Bunn, president of the American Society of Clinical Oncology. He said, however, no oncologist would be enticed by cash to choose a drug.
“If there’s a difference in those two costs, which sometimes there is, the physician uses that pay for cancer care services in the office,” Bunn said.
Pharmacia spokesman Paul Fitzhenry said the reimbursement has in practice “evolved over time to become a means by which physicians and other health care providers are reimbursed for their time and facilities.”
GlaxoSmithKline spokeswoman Mary Anne Rhyne said government has set the prices for years, not the drug company. She said the company does not have control over the spread between the price paid by doctors and pharmacies and the reimbursement rates from Medicare and Medicaid.
Spitzer said that’s a “word game” because the companies report their price, which is the basis of the reimbursement governments make.
Rhyne said GlaxoSmithKline never used the difference between price and reimbursement as a way to sell more drugs.
“We’ve never benefited from the spread becoming bigger or smaller,” GlaxoSmithKline Chief Executive Officer Jean-Pierre Garnier told a meeting of analysts in New York City about the suit. A published report last year estimated that he was paid $10 million a year, including stock options and other benefits.
“Aventis believes that we have complied fully with the laws and regulations,” said company spokeswoman Lise Geduldig. She declined further comment, but said Congress has been reviewing the reimbursement of Medicare and Medicaid.
