Kansas AG sues 13 drug companies over pricing

Chris Rizo Oct. 24, 2008, 11:48am

Steve Six (D)

TOPEKA, Kansas (Legal Newsline)-Thirteen pharmaceutical companies are being sued by Kansas Attorney General Steve Six for allegedly price gouging the state's Medicaid program, officials said Friday.

Six, a Democrat, claims the companies deliberately misreported drug price information to the state in an effort to increase the Kansas Medicaid program's reimbursement rates.

Drug companies are required to disclose their pricing schemes to a variety of customers, including pharmacies, wholesalers and distributors. The information is used by the state to determine what Medicaid pharmacies pay for the medications.

Those costs, plus prescription dispensing fees, are then paid to Medicaid pharmacies.

"We believe Kansas has lost millions of dollars as a result of these drug companies' fraudulent pricing schemes," Six said. "We allege that the drug manufacturers deliberately inflated the reported Average Wholesale Price-or AWP-and other wholesale prices for their drugs in order to increase market share for their products," he said. "This is a disturbing abuse of the Medicaid reimbursement system."

The attorney general's office is suing: Takeda Pharmaceutical Company Limited, Abbott Labs, Wyeth, TAP Pharmaceutical Products, Inc., Schering Plough, Purdue Pharma LLP, Mylan Labs, Forest Labs, Boehringer, GlaxoSmithKline, Johnson & Johnson, Alza Corporation, Janssen Pharmaceutica Products, LP, McNeil-PPC, Inc., Ortho Biotech Products, LP, Ortho-McNeil Pharmaceutical, Inc., DEY, Inc., and Eisai.

Six said as a result of the companies' practice, Kansas taxpayers grossly over-pay for prescriptions for people covered under the insurance program for the poor.

Six said the Average Wholesale Price and other price indicators submitted by the drug companies exceeded the true price by more than 200 percent in some cases. Six said GlaxoSmithKline, for instance, reported an AWP of $128.24 for the anti-nausea medication Zofran, yet it was determined that the price was actually $22.61-a cost spread of 450 percent.

"Because of the drug companies' inaccurate pricing, the Kansas's Medicaid program has spent millions of dollars more for prescription drugs than it should have," Six said. "The companies' false price reporting is all the more offensive because it undercuts Medicaid, the publicly-funded health program created to assist our state's most vulnerable citizens."

The state is being represented by outside counsel. Handling the case is the Kansas law firm of Bartimus, Frickleton, Robertson & Gorny, P.C. and the Alabama firm of Beasley Allen. Six noted the firm was selected in consultation with the state Legislature after a competitive bidding process.

From Legal Newsline: Reach reporter Chris Rizo at chrisrizo@legalnewsline.com.

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