Thursday, March 11, 2004

Drug companies deny overcharging Ohio

By Mike Boyer
The Cincinnati Enquirer

At least two of the five drug companies named in a multimillion-dollar fraud suit filed by Ohio's attorney general denied Wednesday that they overcharged the state's Medicaid program.

"We're confident our pricing complies with the law," said Elizabeth Hoff, spokeswoman for Abbott Park, Ill.-based Abbott Laboratories Inc.

Likewise, Napa, Calif.-based Dey LP, a maker of drugs to treat respiratory diseases, said the allegations were false and that it would vigorously defend itself in court.

The suit filed in Hamilton County Common Pleas Court Tuesday on behalf of Ohio Attorney General Jim Petro says Abbott, Dey, New Jersey-based Schering-Plough Corp. and its Warrick Pharmaceuticals unit and Pharmacia Corp., acquired a year ago by drug giant Pfizer Corp., issued "false and misleading wholesale price and acquisition data" used by state agencies to pay for prescription drugs at inflated prices.

The lawsuit seeks unspecified damages and penalties to be determined at trial. Petro said the overcharges cost Ohio's $1 billion Medicaid prescription drug program "tens of millions of dollars."

Representatives of Pfizer and Schering-Plough said they either hadn't seen the lawsuit or had no immediate comment.

Ohio is one of at least half a dozen states that have filed similar cases against drug companies.

Pennsylvania Attorney General Jerry Pappert said Wednesday he was suing 13 major pharmaceutical companies for allegedly inflating prices in a scheme that cost the government, insurers and consumers hundreds of millions of dollars.

The Ohio case pits some of the nation's biggest drug makers against one of their biggest legal nemeses.

Petro named Cincinnati attorney Stanley Chesley, who has a national reputation for handling complex litigation, as special counsel.

Chesley's firm, Waite, Schneider, Bayless & Chesley, has been center stage in a number of high-profile national cases involving drug and medical device makers.

For example, he represented thousands of women in the Dow Corning breast implant case and negotiated an estimated $4.8 billion class-action settlement for users of the weight loss drug known as fen/phen.

At issue in the Ohio case is the drug company's use of so-called "average wholesale price" or "wholesale acquisition cost" for drugs.

The suit claims despite use of the published "average wholesale prices" for Medicaid reimbursement, each of the drug makers "uses undisclosed discounts, rebates and other inducements that have the effect of lowering the actual wholesale prices charged to its customers."

Dey, in its statement, said the growing list of cases may end up putting the entire Medicaid reimbursement system on trial.

"Dey believes, as do many independent critics and government officials, that in spite of their well-intentioned purposes, these reimbursement systems are seriously flawed," the company said.

"For years, the states as well as the federal government have known - and accepted - that the published average wholesale price of a drug represents something more akin to a 'sticker price' than the actual price of the drug."


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