Abbott accuses drug companies of price manipulations

By Chris Rizo | Jul 9, 2008

Greg Abbott (R)

AUSTIN, Texas (Legal Newsline)-Texas Attorney General Greg Abbott on Wednesday filed a complaint against several pharmaceutical companies for allegedly reporting inflated drug prices to the state's Medicaid program.

Listed in the Republican attorney general's enforcement action were: Watson/Schein Pharmaceuticals Inc. of California; Alpharma Inc. of New Jersey; Par Pharmaceutical Inc. of New Jersey; and Barr Pharmaceuticals Inc. of New York.

In court papers filed in Travis County District Court, Abbott claims the companies violated state and federal law by not reporting accurate sales prices to the state's Medicaid program, which provides healthcare services to low-income Texans.

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.

The attorney general said in the 80-page complaint that because the drug manufacturers falsely reported prices, Medicaid reimbursed pharmacies at inflated rates.

"The resulting windfall profits, which date back to the early 1990s, unlawfully induced pharmacies and other providers to purchase the defendants' products," the attorney general's office said in a statement.

From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.

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