Drug suit by state’s AG shows he’s looking out for taxpayers

posted on:
October 27, 2008

author:
Staff

category:
Fraud

Kansas Attorney General Steve Six filed suit Friday against 13 drug manufacturers, claiming the companies artificially inflated drug prices for medicines commonly prescribed to Medicaid recipients.

Specifically, Six claims the state/federal health care program for the poor paid out $160 million more in prescription drug benefits than it should have, due to a fraudulent pricing scheme.

While it will take some time for the courts to decide the merit of Six’s allegations, it’s encouraging to know that the attorney general’s office is keeping an eye out for the state’s best interests, which in turn benefits taxpayers. It’s a duty of the attorney general’s office that has been placed on the back burner the past several years.

According to Six, Kansas Medicaid uses the average wholesale price, or AWP, to determine what amount the state should pay for prescription drugs. Drug companies are reimbursed by Medicaid based on a “spread” between the reported wholesale price and the actual cost of the drugs to pharmacies.

In this case, Six accuses the drug makers of reporting false AWPs to the state to increase the reimbursement amounts. In one instance, a drug reported had an AWP of more than $44, while the price to pharmacies was only $8.35. In another case, GlaxoSmithKline reported an AWP of $128.24 for the drug Zofran – used to treat nausea for cancer treatment patients – while the actual price was $22.61, a 450 percent spread.

This isn’t the first suit Six has filed against drug companies recently, thanks to a renewed commitment to consumers at the attorney general’s office.

On Oct. 22, Six, along with the attorneys general of 33 other states, secured a $60 million judgment against Pfizer for false advertising claims that the drug Celebrex was safer and more effective than other anti-inflammatory drugs. Earlier in October, Six won a multi-state settlement with Eli Lilly, the makers of Zyprexa, for promoting “off-label” uses of the drug.

Friday’s suit charges drug makers such as Abbott Labs, Wyeth, Schering-Plough and Johnson and Johnson with breach of contract, fraud and violation of the Kansas Consumer Protection Act, among other violations.

Should the courts rule in favor of Six’s suit, the companies should reimburse the state’s Medicaid program for the overage. Regardless of any court ruling, drug companies should be subject to tougher scrutiny from state officials in the future.

And Kansans should take some small measure of satisfaction in knowing that we finally have an attorney general who is keeping an eye out for Kansas taxpayers.

 

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