Louisiana Attorney General Buddy Caldwell has filed a lawsuit alleging that 18 drug companies have ripped off state taxpayers by overcharging the Medicaid program. The companies misreported their drug prices in a deliberate effort to increase the payments they receive from the Louisiana Medicaid system. Under federal law, Medicaid payments to drug providers are derived using a series of pricing levels – wholesale acquisition cost, average wholesale and non-wholesale price – that the companies disclose to reporting services that in turn provide the information to state governments. There will be additional companies added to the suit as Defendants.
As part of the joint state-federal Medicaid program, the state of Louisiana paid pharmaceutical providers more than $850 million last year. The drug coverage typically comprises about 15% of the total Medicaid budget. Some average wholesale prices were as much as 6,000% higher than the drugs’ true cost. The inflationary pricing practices reach back as far as 1991. Attorney General Caldwell said in a written statement:
This is an egregious abuse of the Medicaid reimbursement system. We believe Louisiana has lost hundreds of millions of dollars as a result of these … fraudulent pricing schemes.
Similar lawsuits have been filed by the federal government and 27 other states, and the issue has attracted the attention of Congressional investigators and the federal government’s Government Accountability Office. The Defendants effectively reported one set of price points then used undisclosed discounts, rebates and other inducements for its non-government customers. It would be impractical, if not impossible, to list in this petition for the entire time period that the inflated pricing scheme has been in effect. That will be proven at trial.
The following companies are Defendants in the lawsuit: Abbott Laboratories Inc.; Baxter Healthcare Corp.; Covidien Inc.; Lupin Pharmaceuticals Inc.; Watson Pharma Inc.; Baxter International Inc.; Mallinckrodt Brand Pharmaceuticals Inc.; Forest Laboratories Inc.; King Pharmaceuticals Inc.; Monarch Pharmaceuticals Inc.; Ranbaxy Pharmaceuticals Inc.; Ranbaxy Laboratories Limited; Tap Pharmaceutical Products Inc.; United Research Laboratories Inc.; Watson Pharmaceuticals Inc.; and Watson Laboratories Inc.
The conduct by the Defendants violates the state’s Unfair Trade Practices and Consumer Protection Law, the Medical Assistance Programs Integrity Law, and state antitrust laws. Earlier this year Louisiana made a $20 million settlement with drug giant Eli Lilly. In that case, Louisiana, echoing 12 other states that filed separate suits, alleged that the Indianapolis-based firm illegally marketed the anti-psychotic drug Zyprexa for uses that had not been approved by federal regulators. Our firm, along with the Block Law Firm of Thibodaux, Louisiana, is working with the Attorney General on this important case.
Source: Release from Attorney General’s office
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