Healthy Skepticism Library item: 15109

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Publication type: news

O’Reilly C.
Pfizer Unit Bilked Wisconsin Medicaid, Owes Damages
Bloomberg.com 2009 Feb 17
http://www.bloomberg.com/apps/news?pid=20601103&sid=arPSx1kJL2y8&refer=us

Full text: Pfizer Inc.’s Pharmacia unit was found by a jury to have illegally overcharged Wisconsin’s Medicaid program and may have to forfeit tens of millions of dollars in profits, the state’s attorney general said.

Jurors in Madison, Wisconsin, found that Pharmacia should pay $9 million to compensate the state for its losses. A hearing to determine the amount of forfeitures hasn’t been scheduled, Attorney General J. B. Van Hollen said today in an interview.

Pharmacia violated Wisconsin’s Medicaid Fraud law more than 1.4 million times, the jury ruled late yesterday. Van Hollen said that under state law, the judge in the case may award from $100 to $15,000 per violation, or as much as $21 billion.

“Rest assured we will be making a recommendation at the low end,” Van Hollen said. “It’s not my goal or my duty to put the death penalty” on any company or industry, he said. Pfizer can continue to participate in the state’s Medicaid program, Van Hollen said.

Even if the judge awards only $100 per violation, “that’s still $144 million, plus court costs and interest, for the people of Wisconsin,” he said.

The case against the unit of Pfizer, the world’s largest drugmaker, is the latest round of litigation over the AWP system. At least 27 states have sued dozens of drugmakers over the practice, with Alabama having already secured jury verdicts worth about $330 million against three companies.

Artificially Inflated

The companies are accused of posting artificially inflated AWP prices and then “marketing the spread” to win business by encouraging pharmacies and doctors to seek reimbursement from state Medicaid programs at the full AWP price. The wider the spread, the more likely a doctor or pharmacy was to prescribe or promote the company’s product, lawyers for the state said in opening arguments of the Wisconsin trial that began Feb. 4.

Wisconsin alleged Pharmacia reported an AWP of $241.36 for a 20 milligram dose of the cancer drug Adriamycin in April 2000 when the medicine was actually selling at wholesale for as low as $33.43. Doctors were told they could keep the difference. The state requested $9 million in compensatory damages.

“This verdict confirms that Pharmacia knew when it published false average wholesale prices for its drugs it would cause the state to grossly overpay for prescription drugs,” Van Hollen said in a statement.

Pfizer, based in New York, said it will appeal the verdict.

“As we have maintained all along, the reimbursement rates paid to Wisconsin pharmacists were the result of deliberate decisions by the state of Wisconsin about how best to serve its Medicaid population,” Chris Loder, a spokesman for Pfizer, said in an e-mailed statement.

First Wisconsin Trial

The case against Pharmacia, a Peapack, New Jersey-based, unit of Pfizer, is the first AWP claim to go to trial in Wisconsin. The outcome may influence the resolution of Wisconsin’s 33 other pending cases against drugmakers, analysts said. Amgen Inc. and Immunex Corp. agreed in December to pay $1.7 million to settle AWP claims in the state.

“It is an industrywide phenomenon of pharma running afoul of Medicaid rules because the rules are so complicated and also part of it is because pharma wants to get every dollar they can,” said Les Funtleyder, an analyst with Miller Tabak & Co. in New York. “It really hasn’t gotten the attention of Wall Street yet, but you would think if there are enough checks written it will.”

While Medicare and many state Medicaid programs have moved away from the AWP system, it is still used by some insurers, including those providing so-called Medigap coverage for drugs not paid for by the government programs.

Pfizer fell 33 cents, or 2 percent, to $14.25 in New York Stock Exchange composite trading. The shares have declined 20 percent this year.

The case is State of Wisconsin v. Amgen, 04-cv-1709, Wisconsin Circuit Court (Madison).