About 40 pharmaceutical companies that inflated drug prices will pay the State of Hawaii $82 million to settle the claims. Attorney General Mark Bennett made the announcement of the settlement on October 6th. The companies bumped up the prices of their drugs bought for Medicaid prescriptions from 1993 to 2006, resulting in the state overpaying for medications for tens of thousands of patients. In an extreme example, the Medicaid program paid $1,480 for an ulcer medication that was available for $27.70. Lillian Koller, director for the Department of Human Services, had this to say:
We’re committed to the integrity of our Medicaid program, to making sure that the resources are there to help the neediest people in the state. We can’t allow people to be stealing from us.
The settlements were made public after Circuit Judge Gary Chang vacated a confidentiality order. The largest share of the settlement comes from Merck & Co., the country’s second-largest drug manufacturer, which will pay $28 million. The companies that settled include AstraZeneca Pharmaceuticals, GlaxoSmithKline PLC, Pfizer Inc., Johnson & Johnson, Novartis Pharmaceuticals, and Bristol-Myers Squibb. The government paid for drugs based on the manufacturer’s figure for their average wholesale price, which exceeded prices paid by pharmacies. The cost of prescription drugs in Hawaii’s Medicaid program soared from $45 million in 1999 to $117 million in 2004. The methods used to inflate drug prices went undetected for a considerable time. The Attorney General had this to say:
The feds didn’t see it. We didn’t see it. Everybody that we sued was doing it. We alleged that this was an industry practice.
The actual damages suffered by Hawaii were between $20 million and $25 million. So this was a very good settlement for the state. Taxpayers were the ones ultimately cheated by the price gouging because their federal and state levies fund Medicaid. The payment will give state government in Hawaii more money and will reduce the need to raise taxes or further cut services. The state is considering additional lawsuits against other companies involved in related schemes, according to the Attorney General’s office.
The settlement in Hawaii is the latest in a series of ongoing litigation in states throughout the country against pharmaceutical companies alleging Medicaid fraud. Our firm represented the State of Hawaii, along with the firms of Miner, Barnhill & Galland, which has offices in Wisconsin and Chicago, and Price Okamoto & Lum of Honolulu.
Hawaii is yet another example of how the drug manufacturers have systematically perpetrated their fraudulent pricing schemes on state and federal Medicaid programs to line their pockets at the expense of the taxpayers of this country. But for the jury system in this country, this fraudulent scheme may have never been fully unveiled. The Hawaii judicial system is the real hero in this case and the State of Hawaii is the beneficiary. The lawsuit was filed by the State of Hawaii in 2006, alleging that for more than a decade the drug makers had published inflated prices for prescription drugs, causing the overpayment of millions of dollars in drug costs.
Sources: Release from Attorney General’s Office and Associated Press
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