Healthy Skepticism Library item: 17119
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Publication type: news
O’Reilly C
Merck, Pfizer Overcharged New York, Judge Rules (Update1)
Bloomberg.com 2010 Jan 28
http://www.bloomberg.com/apps/news?pid=20601202&sid=aeDJXcFZrPCg
Full text:
Merck & Co., Pfizer Inc. and seven other drugmakers overcharged New York City and 42 New York counties for medicines and may be liable for damages on millions of dollars in drug sales, a federal judge ruled.
The companies, including Mylan Inc. and units of Teva Pharmaceutical Industries Ltd. and Novartis AG, unlawfully obtained public funds for health-care providers by making false statements about prices of nine drugs, U.S. District Judge Patti Saris in Boston ruled yesterday. The judge will hold a separate hearing on damages, which may be tripled under state law.
New York City and the counties claimed the drug companies illegally sought to increase market share by selling medicines to physicians at steep discounts to “Average Wholesale Prices” they published. Medicare and Medicaid used the posted prices to establish reimbursement rates for doctors. By inflating AWPs, the companies artificially boosted the payments, Saris said.
The drug companies “attempted to obtain payment from public funds on behalf of providers by means of a materially false statement or representation,” Saris said in her order. “There is simply no evidence that defendants believed that the prices they reported were even true list prices.”
The ruling is the latest decision by Saris in the nine-year litigation over AWP. States and municipalities sued dozens of drugmakers, seeking to take back millions of dollars in prescription drug payments they say were unlawfully obtained by pharmaceutical companies using inflated price reporting.
1,000%
AWP was used by government health programs such as Medicare and Medicaid to set reimbursement rates for doctors who care for patients under the government health programs. New York Medicaid paid more than $13 billion from 1997 to 2003 for the drugs at issue in the litigation, court records show. The drugmakers say the governments knew the posted prices weren’t the actual costs of pharmaceuticals but were more like sticker prices on cars.
Experts for the New York governments testified that the spreads between prices the companies reported as “Wholesale Acquisition Costs” for medicines and actual acquisition costs were consistently above 50 percent, frequently more than 100 percent and sometimes more than 1,000 percent, records show.
“The defendants knew that the list prices they reported were fictitious list prices,” Saris said. Whether the state officials acted reasonably in relying on the published prices is an issue that still needs to be resolved, she said.
Merck spokesman Ron Rogers said the Whitehouse Station, New Jersey-based company is disappointed with the decision and is considering whether to appeal.
Complied with Laws
Merck’s Schering-Plough unit “and other defendants in no way benefited from these rates as they do not receive reimbursement from Medicaid,” Rogers said in an e-mailed statement today. The company believes that its Warrick unit “complied with all applicable laws and regulations governing pharmaceutical pricing and reimbursement.”
Chris Loder, a spokesman for New York-based Pfizer, the world’s largest drugmaker, also said the company may appeal.
“Pfizer’s Wyeth subsidiary complied with all applicable laws and regulations,” Loder said in an e-mailed statement. “Pfizer disputes that any pricing information provided by its Wyeth subsidiary regarding its prescription drugs caused New York City or any New York county to overpay.”
Loder said the decisions at issue in the judge’s finding were informed choices made by the federal government with knowledge of the prices being paid in the marketplace. “No one was misled,” he said.
Medicare, the federal health plan for the elderly, switched in 2004 from AWP to a system of paying 106 percent of the average reported sale price of a drug.
The case is In re Pharmaceutical Industry Average Wholesale Price Litigation, MDL No. 1456, U.S. District Court, District of Massachusetts (Boston).
