California Attorney General Edmund G. Brown Jr. announced a $21.3 million settlement last month with Schering-Plough Corporation, resolving allegations the giant drug manufacturer “deliberately inflated” the price of Albuterol and other drugs, causing California’s Medicaid (Medi-Cal) program to overpay millions of dollars in pharmacy reimbursements. Albuterol is a widely-prescribed generic drug, delivered through inhalers, nebulizers and masks, and is used to treat asthma and other breathing problems. Attorney General Brown had this to say:
With healthcare costs spiraling out of control, it’s unconscionable that a Fortune 500 pharmaceutical company deliberately inflated its drug prices to cheat California’s public healthcare system out of millions of dollars. This is a company that made more than $12 billion in profits last year, yet still raided the pockets of California taxpayers.
The settlement stems from a lawsuit filed in California against several pharmaceutical companies accused of Medicaid fraud. California’s case is still pending against Dey, Inc., Mylan Pharmaceuticals, Inc., Sandoz, Inc. and their parent companies. Schering-Plough recently merged with Merck, and is now known as Merck & Co. California’s $21.3 million agreement is one of three settlements negotiated with Schering-Plough, collectively totaling $69 million, over falsely-inflated drug prices. Schering-Plough also reached settlements with Florida and the federal government, the latter for approximately $44.5 million.
The California settlement resolves allegations that Warrick Pharmaceuticals, a subsidiary of Schering-Plough, deliberately inflated the Average Wholesale Prices it reported to the state for Albuterol. Medi-Cal sets the reimbursement rates for pharmacies for many of the drugs dispensed to Medi-Cal patients based on the AWPs reported by drug manufacturers. California pharmacies dispensed Albuterol to patients and were then reimbursed by Medi-Cal. By reporting falsely inflated AWPs, a number of drug manufacturers caused Medi-Cal to overpay millions of dollars in pharmacy reimbursements.
If this story sounds familiar, it should because the fraud in California is identical to the fraud committed by the drug companies in Alabama. The citizens of our state and maybe even Justices on our state’s Supreme Court must be wondering why a drug manufacturer would be paying $21.3 million for fraudulent conduct if they weren’t guilty of fraud. They might also be asking how can conduct by a drug manufacturer constitute fraud in California, but not in Alabama?
Source: California Attorney General’s Office Press Release
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