Texas Attorney General Sues Pharmaceutical Companies for Overcharging State Medicaid

Monday, November 24, 2008 by: David Gutierrez, staff writer
Tags: Medicaid, health news, Natural News

(NaturalNews) The Texas Attorney General's office has filed lawsuits against four manufacturers of generic prescription drugs, accusing them of illegally misreporting their drug prices in order to get more money out of the state Medicaid program.

"The Attorney General's enforcement action reflects a continuing crackdown on waste, fraud and abuse in the Medicaid system," the office said in a statement.

The lawsuits allege that Alpharma Inc., Barr Pharmaceuticals, Par Pharmaceutical Inc. and Watson/Schein Pharmaceuticals Inc. deliberately misreported their drug prices to Medicaid, causing the state health care agency to pay too much in reimbursements.

Because Medicaid uses these prices as the basis for prescription cost reimbursements, price inflation by drug companies causes the program to overpay pharmacies for certain drugs. This leads to exceptionally high profits for pharmacies, thus encouraging pharmacists to preferentially prescribe brands whose prices have been misreported - all of which leads to an increase in company profits.

Recently, the state of Texas received more than $15.7 million from major pharmaceutical corporation Bristol-Myers Squibb in a settlement of a similar lawsuit. Forty-two states had accused the company of inflating prices of its anti-depression drug Serzone, as well as several generic anticancer drugs. The company has also been charged with illegally marketing its atypical antipsychotic Abilify for unapproved uses, including for the treatment of children and of seniors with dementia-related psychosis.

The Texas attorney general's office has also recovered $8.5 million from Baxter Healthcare, $10 million from Boehringer Ingelheim/Roxane Laboratories, $18.5 million from Dey Inc. and $27 million from Schering-Plough/Warrick Pharmaceuticals for Medicaid price fraud.

"In 2006 alone, the Texas Medicaid program cost more than $17 billion," the attorney general's office said. "To save taxpayer dollars, Attorney General Abbott has dramatically expanded both the Civil Medicaid Fraud Section and the Medicaid Fraud Control Unit."

Lawsuits are still pending against B Braun Medical Inc. and Abbot Laboratories Inc.

Sources for this story include: www.bizjournals.com.