Healthy Skepticism Library item: 11967
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
Narang P.
Schering-Plough: artificial prices case highlights an industry-wide issue
Pharmaceutical Business Review 2007 Nov 6
http://web.archive.org/web/20081004232205/http://www.pharmaceutical-business-review.com/article_feature.asp?guid=15A5D0E8-42E6-4678-85D9-1DEC3F12EED6
Full text:
A US court clears Schering-Plough’s subsidiary of inflating drug prices
Schering-Plough’s generic subsidiary Warrick Pharmaceuticals has been cleared of artificially inflating drug prices by the Massachusetts District Court. Although Schering-Plough has been cleared of the allegations, the case has implications for the amount of reimbursement healthcare providers pay out and therefore for the US healthcare system as a whole.
The ruling comes after an earlier lawsuit which charged Schering-Plough, in addition to AstraZeneca and Bristol-Myers Squibb, with misrepresenting the average wholesale price (AWP) of their drugs. In June 2007, Schering-Plough’s branded division was exonerated of all liability; however, a question mark remained over Warrick’s generic respiratory drug albuterol sulfate for the period 1998�99.
Schering Plough maintained that it complied with all pricing and reimbursement regulations, and this is supported by the court’s latest ruling reversing the original decision. The court found that Warrick’s AWPs had not impacted on Medicaid’s reimbursements.
While the actual prices charged to pharmacists and physicians and those declared by the drug manufacturer are unlikely to always be aligned, recent lawsuits in the US indicate that they are in many cases substantially different. At least 16 states are currently pursuing lawsuits against drug manufacturers alleging artificially inflated prices. By artificially inflating drug prices, while selling to retailers at a reduced rate, generic manufacturers have prompted Medicaid and other health insurance providers to reimburse pharmacies in excess of that which is necessary.
The amount reimbursed by Medicaid is decided by individual states on the basis of information provided by drug manufacturers � the AWP and wholesale acquisition cost (WAC) for a drug. By the manufacturer ostensibly increasing AWPs and WACs, while selling drugs at a reduced rate, the drug retailer is ‘overcompensated’, and more likely to buy from such manufactures, thereby increasing their volume sales, with healthcare providers being the only losers in the equation.
With spiraling healthcare expenditure in the US, healthcare providers are increasingly looking to contain costs, and are therefore clamping down on ‘unnecessary’ expenditure, of which excessive reimbursements are one rather glaring example.
