Caldwell files AWP suit against 18 companies

By Keith Loria | Nov 2, 2010


NEW ORLEANS (Legal Newsline) - Louisiana Attorney General Buddy Caldwell announced on Monday that he has filed a lawsuit against 18 drug companies that allegedly overcharged Louisiana Medicaid.

The suit alleges the companies violated the Louisiana Unfair Trade Practices and Consumer Protection Act, Louisiana's Antitrust Statute and the Louisiana's Medical Assistance Programs Integrity law.

The 18 pharmaceutical companies allegedly deliberately misreported drug price information in order to increase reimbursements made by the state's Medicaid program. The reimbursements are based on what is called Average Wholesale Prices.

Caldwell said that the federal government and 27 other states have brought similar lawsuits that have resulted in multiple million dollar verdicts and settlements.

Caldwell also alleges that the drug manufacturers deliberately provided false and inflated AWPs, which impacted state taxpayers because the Medicaid program was overpaying for prescriptions.

"This is an egregious abuse of the Medicaid reimbursement system," Caldwell said. "We believe Louisiana has lost hundreds of millions of dollars as a result of these drug companies' fraudulent pricing schemes."

The Louisiana Medicaid Program spent over $850 million for pharmaceutical drugs in the period from 1991-2009. The suit alleges that the price for a drug paid by the state often bears no relationship to the true price and can exceed 30 percent to 6,000 percent of the true price.

The difference between the reimbursement amount and the acquisition cost is the "spread." Caldwell said that one of the reasons drug companies report false and inflated AWPs is to create a spread between the reimbursement amount Louisiana Medicaid pays and the actual cost of acquisition the pharmacy-provider pays to obtain the drug.

Caldwell is seeking recovery of all overpayments with interest as well as damages, fines, penalties and costs associated with the litigation.

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