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California Attorney General Accuses Drug Companies of Fraud

Source: Office of California State Attorney General

California Attorney General Bill Lockyer filed a lawsuit on Thursday against 39 pharmaceutical companies, accusing them of defrauding the state of hundreds of millions of dollars.

The lawsuit alleges that the defendants attempted to maximize profits by engaging in insidious sales schemes to increase market share. Specifically, they provided false and misleading information with full knowledge that the state would rely on their data in setting the amount of reimbursement for pharmaceutical products covered by the Medi-Cal program.

"We're dragging these drug companies into the court of law because they're gouging the public on basic life necessities," Lockyer said. "This may be a bitter pill for the drug companies to swallow, but the days of prescription pricing fraud are over."

Defendants named in the lawsuit include Abbott Laboratories, Bristol-Myers Squibb, GlaxoSmithKline, Novartis, Schering-Plough and Wyeth.

Lockyer's action was prompted by a whistleblower lawsuit filed in California by a small pharmacy, Ven-A-Care, alleging that these pharmaceutical manufacturers provided false and misleading drug pricing information that the Medi-Cal program relied upon to establish its drug payment rates.

An investigation into Ven-A-Care's allegations revealed extensive pricing manipulation that led to Lockyer filing legal action against two major drug manufacturers, Abbott Laboratories and Wyeth Pharmaceuticals, in 2003. However, based on additional evidence gathered through ongoing investigations, Lockyer filed Thursday an amended complaint expanding the original lawsuit by adding more than 30 additional drug makers as defendants.

In California, health care providers are reimbursed for drugs dispensed to Medi-Cal patients.

The reimbursement rates are based on pricing data supplied by drug manufacturers. Lockyer's suit alleges that the drug makers manipulated the prices, resulting in inflated costs to the state's $34 billion Medi-Cal program, which provides essential health care to poor, elderly and disabled Californians.

"This scheme has cost California taxpayers potentially hundreds of millions of dollars, and is jeopardizing the public health by diverting money away from patient care. The amount of money that drug companies have cheated out of California could have been better spent on ensuring that every child in this state has access to health care," said Lockyer.

The lawsuit was filed in U.S. District Court in Boston, MA. It alleges that the defendants, for the purpose of capturing greater market control, knowingly caused the filing of false claims for reimbursement by the state. California's False Claims Act provides up to treble damages and penalties of up to $10,000 per false claim.

Read Full Story at Office of California State Attorney General

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