Healthy Skepticism Library item: 14553

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Publication type: news

Ratcliffe H.
St. Louis jury says pharmaceutical companies cheated Medicaid
ST. LOUIS POST-DISPATCH 2008 Oct 31
http://www.stltoday.com/stltoday/news/stories.nsf/stlouiscitycounty/story/59273167BA18A55D862574F30012983A?OpenDocument

Full text:

Three pharmaceutical companies will have to pay at least $7.3 million to the state of Missouri after a St. Louis jury found Thursday that they overcharged Medicaid for prescription drugs.

The jury sided with the Missouri attorney general’s office, which claimed the companies schemed to boost profits by artificially inflating their “average wholesale price” on three drugs for respiratory ailments.

Late Thursday, jurors returned to deliberations on punitive damages, which would have to be paid atop the $7.3 million in actual damages.

“This is a simple case of fraud by reporting false prices,” Rex M. Burlison, chief of the attorney general’s office in St. Louis told the jury this week. “Do I get indignant when I see stealing from the state Medicaid program? … You betcha.”

The companies, Warrick Pharmaceutical, Schering Corp. and Schering-Plough Corp., were “marketing the spread,” Burlison said, encouraging pharmacies and other health care providers to buy their brands by creating a large difference between the average wholesale price and the actual cost. The average wholesale price is a factor in how much Medicaid reimburses for drugs for the poor.

Mike Moore of Dallas, who represents the pharmaceutical companies, called the average wholesale price a “sticker price” from which both sides could negotiate. He said Missouri’s own policies were responsible for any overpayment. He said state officials knew what the average wholesale prices were and never objected until the lawsuit.

“The state controls the Medicaid reimbursement system,” Moore said. “There is no evidence that we hijacked the system.”

As many as 20 other states have suits against these same companies, making similar allegations. The companies won the only other case to get to trial so far, which was in West Virginia, officials said.

Another company originally named in the suit, California-based Dey Inc., settled with the state.

Warrick and Schering are a subsidiary of New Jersey-based pharmaceutical company Schering-Plough, which specializes in generic drugs. The total net worth of the three companies exceeds $10 billion, Burlison said.

The trial, which was scheduled to start last month, was delayed when potential jurors grumbled about their selection for jury service. Judge David Dowd declared a mistrial and attorneys selected a new jury last week.