Healthy Skepticism Library item: 1567

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Publication type: news

Petersen M.
Pfizer's Chief Is Subpoenaed in an Inquiry on Drug Pricing
New York Times 2002 Jan 8
http://www.nytimes.com/2002/01/08/business/08DRUG.html

Full text:

Federal investigators issued a subpoena last Thursday to Pfizer (news/quote)‘s chief executive, Henry A. McKinnell, after the company refused to provide information on the prices of its prescription drugs.

Investigators in the General Accounting Office said yesterday that they had requested information on prices from 11 drug companies in July and that Pfizer was the only company that failed to comply.

The investigators are looking into whether drug companies have improperly reported prices to the federal government. Under federal law, drug companies must report to the government the various prices they charge customers for each prescription drug sold to patients covered by Medicaid, which provides health care to the poor, the accounting office said.

The government uses that price information to determine how much to pay drug companies, doctors and hospitals for prescription drugs covered by Medicaid or Medicare, which covers the elderly.

The General Accounting Office’s inquiry began last summer at the request of Representative Henry A. Waxman, a California Democrat.

Pfizer confirmed yesterday that Dr. McKinnell and the company had received the subpoena. Mariann Caprino, a Pfizer spokeswoman, said the company could not comment further because the subpoena was still being reviewed.

In a written statement, the General Accounting Office said that Pfizer had declined to provide the information it had requested, saying the information was proprietary and should remain confidential.

In the last year, drug companies have been repeatedly criticized for reporting inaccurate price information to the federal government. The inspector general for the Department of Health and Human Services estimates that inaccurate reporting of drug prices is costing taxpayers more than $1 billion a year just in overpayments for the two dozen drugs that Medicare now covers. Most of those drugs are cancer drugs that must be administered in a physician’s office.

Last year, TAP Pharmaceutical Products agreed to pay $875 million to settle criminal and civil charges that it had illegally manipulated the Medicare and Medicaid programs, in part by reporting inaccurate prices to the government.

TAP reported far higher prices to the government than it actually charged doctors for Lupron, a drug for prostrate cancer, prosecutors said. Because the government reimbursed the doctors based on the excessive prices reported, prosecutors said, doctors were able to make money by prescribing TAP’s drug.