Healthy Skepticism Library item: 15092
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Publication type: news
Foley RY.
Wis. AG hails major victory against drug maker
The Chicago Tribune 2009 Feb 17
http://www.chicagotribune.com/news/chi-ap-wi-drugmakerlawsuit,0,53172.story
Full text:
A subsidiary of Pfizer, Inc. could pay $153 million or more to the state of Wisconsin for artificially inflating prescription drug prices for years, the attorney general said Tuesday.
A Dane County jury ruled Monday night that Pharmacia, Inc. had violated the state’s Medicaid fraud law more than 1.4 million times over a decade. Each violation carries a minimum of a $100 fine and a maximum of $15,000.
Attorney General J.B. Van Hollen said that means the company will be required to pay at least $144 million when a judge sets fines in coming weeks unless a settlement is reached. The jury also ordered the company to pay $9 million in damages to compensate the state for its losses.
Pfizer spokesman Chris Loder denied Pharmacia, which was acquired by Pfizer in 2003, violated any laws or regulations.
“We are disappointed in the jury’s verdict,” he said. “We are weighing all of our options on how to best respond to this verdict and we are planning to appeal.”
But Van Hollen said he hoped the jury’s verdict would lead to settlements worth hundreds of millions of dollars between the state and 32 other drug makers it has sued. Three companies have already reached settlements requiring them to pay more than $3 million in restitution to Medicaid and legal fees.
Van Hollen’s predecessor, Peg Lautenschlager, filed the lawsuit in 2004.
Van Hollen said the litigation has uncovered “good evidence” drug makers knowingly inflated wholesale prices to get larger payments from Medicaid, private insurers and consumers.
For example, Pharmacia sold the breast cancer drug Adriamycin for as little as $33.43, according to the lawsuit. But it listed the wholesale price as $241.36 so providers could get reimbursed for that amount.
It then advertised the $207-plus spread to cancer doctors to give them a financial incentive to provide the drug. The schemes were meant to increase the drugs’ market share, and profit with that, the lawsuit said.
In some cases, doctors, hospitals and pharmacies benefited from the overcharges to Medicaid. In others, most of the money went back to the manufacturers through chargebacks from wholesalers, it said. In all, drug makers collected more than three-quarters of the retail price, Van Hollen said.
At a news conference, Van Hollen read from a 1993 internal memo in which an employee of a Pharmacia predecessor wrote that “three decades of gaming the present reimbursement scheme has provided a lucrative avenue of profit…”
“We as taxpayers, we as consumers, are not going to put up with being ‘gamed’ by anyone — no matter how big, no matter how small,” Van Hollen said.
Van Hollen said the $9 million would reimburse Medicaid and be used by his office for fighting fraud and protecting consumers. Any fines ordered by Dane County Judge Richard Niess would go into the school fund, he said. A date for that hearing has not been set but could happen within two weeks.
The legal fees the company must pay Department of Justice lawyers and Madison-based Miner, Barnhill & Galland, the law firm hired by the state to help in the litigation, will be decided later.
Van Hollen said a settlement with Pharmacia was possible to avoid an appeal and get the state its money faster.
The lawsuit only seeks to recover inflated reimbursements paid by Medicaid, the state and federal health care program for the poor, disabled, elderly and blind. It does not seek reimbursements on behalf of private insurers and other consumers who have paid the inflated prices.
Van Hollen said he did not want to drive the drug makers out of business. Instead, he wants to recover the fraudulent payments, punish the companies for wrongdoing and get them to change their practices.
In all, he said, the lawsuit challenges the cost of “just about every significant drug out there.”
New York-based Pfizer is one of the remaining defendants in the case, along with Johnson & Johnson, Inc., Merck Co., and Bristol-Myers Squibb Co.
