In a week dominated by wrangling over lawsuits, another legal battle is
brewing in the USA as California’s attorney general announced plans to sue
pharmaceutical companies over their pricing practices.
Bill Lockyer is taking action against 39 pharmaceutical companies claiming
that they have defrauded California through a drug pricing scheme “that has
forced the state’s Medi-Cal programme to pay artificially inflated rates,
resulting in a loss of potentially hundreds of millions of dollars.”
Firms named in the lawsuit in addition to Abbott Laboratories and Wyeth (see
below) include many of the industry’s big names, eg Amgen, Aventis,
Boehringer Ingelheim,Bristol-Myers Squibb, GlaxoSmithKline, Merck KGaA,
Mylan, Novartis and Schering-Plough.
Mr Lockyer issued a statement saying that “we’re dragging these drug
companies into the court of law because they’re gouging the public on basic
life necessities. This may be a bitter pill for the drug companies to
swallow, but the days of prescription pricing fraud are over. We’re seeking
immediate legal relief.”
Mr Lockyer’s suit alleges that prices were manipulated resulting in inflated
costs to the state’s $34 billion Medi-Cal scheme, which provides health
insurance for the poor, arguing that “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.”
Mr Lockyer says his action was prompted by a whistleblower lawsuit filed in
California by a small pharmacy, Ven-A-Care, alleging that the pharmaceutical
manufacturers provided false and misleading information that the Medi-Cal
programme relied upon to establish its drug payment rates.
An investigation by the Attorney General into Ven-A-Care’s allegations led
to him filing a suit in Boston against Abbott and Wyeth in 2003 and this
latest filing is an amendment to that complaint. In one case, cited in the
2003 lawsuit, Abbott reported a reimbursement price of $49.42 for a gram of
the antibiotic vancomycin, but charged pharmacies just $8.06.
At the time of writing, none of the drugmakers named had commented on the