Forty-eight pharmaceutical companies have been named in a lawsuit filed earlier this week by Illinois Attorney General, Lisa Madigan, which accuses them of fraudulently inflating the average wholesaler prices for their medicines for more than ten years.
The lawsuit, which comes hot on the heels of 19 similar suits filed in various other US states, specifically alleges that the companies in question – which include some of the Industry’s big names, such as Pfizer, GlaxoSmithKline, AstraZeneca and Schering-Plough – published one price for their drugs, but allowed healthcare providers (such as doctors, pharmacies and hospitals) to buy the products at a much lower price. The suit claims that government programmess and Illinois Medicare consumers overpaid hundreds of millions in drug costs, and that the pharmaceutical companies pocketed the difference.
In addition, the complaint alleges that the providers – seeking bigger profits for themselves – tend to prescribe and sell the drug with the largest spread – and the most kickback for themselves. This practice results in state Medicaid programs and Medicare participants who must pay co-pays being gouged, whilethe providers and drug companies rake in billions. “Drug companies have manipulated the average wholesale prices and used these prices to overcharge state and federal government programs, taxpayers and Medicare consumers,” AG Madigan said in a statement. “We allege that this scheme is deceptive and illegal and has cost the state government and Medicare consumers millions of dollars.”
In addition to the allegations about the pricing scheme, AG Madigan’s lawsuit also alleges that, to conceal the true prices, drug manufacturers have given secret discounts and rebates to providers and have used various other devices including marketing schemes and confidentiality agreements.