Given history, drug companies' schemes are hardly shocking. Last week, a federal judge ruled against Astrazeneca, Bristol Myers Squib, and Schering Plough over "unfair and deceptive trade practices," costing government programs, insurance companies, and patients a bundle. (Wall Street Journal).
Basically, the companies published inflated "average wholesale prices" (AWPs) for certain drugs, knowing that taxpayers and others would pay for those drugs based on the AWPs (Washington Post). Plaintiffs argued the drug companies charged doctors less for drugs while "secretly encouraging them to claim full reimbursement," which made the AWPs look legitimate (New York Times)
This is not the first time Astrazeneca, Bristol-Myers Squib or Schering Plough were sued over illegal schemes....
This year, Bristol Myers Squib pled guilty to lying to the federal government about illegal actions intended to boost profits for the blood thinner Plavix.
In 2004, Schering-Plough settled Justice Department suits for $345 million after allegedly paying illegal kickbacks and disguising the actual prices it charged HMOs for drugs to avoid paying rebates owed to taxpayers.
In 2003, AstraZeneca settled Justice suits for $280 million after allegedly conspiring with healthcare providers to charge goverment programs for free samples Zoladex (a prostate-cancer drug).
It gets worse.
Back in 2004, Wisconsin's Attorney General sued 20 drug makers over false AWPs -- including Astrazeneca, Bristol Myers, and Schering Plough.
In the recent suit, Judge Patti Saris ( U.S. District Court in Boston) found that AstraZeneca caused publication of AWPs for Zoladex inflated by up to169% of the prices doctors or healthcare providers paid. (New York Times) Zoladex was the same cancer drug at issue when AstraZeneca settled the Justice Department fraud suit in 2003 (DoJ press release).
Judge Saris also found that Schering-Plough inflated AWPs from 100% to 800% and that Bristol-Myers inflated AWPs for five drugs (including cancer-drug Taxol) by up to 500% of the prices doctors or healthcare providers were paying (New York Times).
This isn't the first time Bristol Myers' faced government criticism over Taxol prices. The National Institutes of Health (NIH) spent nearly $500 million developing the breakthrough cancer drug Paclitaxel (ultimately marketed as Taxol). The NIH gave Bristol Myers exclusive rights to the drug, which debuted in 1993. Because tax dollars funded Taxol's creation, Bristol Myers was supposed to pay the NIH royalties and charge reasonable prices. (See GAO report)
Instead, Bristol Myers charged $10,000 - $20,000 for Taxol, claiming it had spent $1 billion developing Taxol and wanted to recoup costs. That figure was not verified. By 2002, Bristol Myers' Taxol sales were $9 billion -- nine times what it claimed to spend on the drug. Of that $9 billion, about $700 million came from U.S. taxpayers via Medicare. (GAO report)
The Pharma Fraud Blog has an interesting take on insurance companies' involvement in the AstraZeneca/Bristol-Myers/Schering-Plough case:
"Why are they even a part of this litigation? The Class Action Attorneys brought TPPs [insurance companies] into this case kicking and screaming.... Many refused to answer subpoenas, and insisted this case had no relevance for them.... TPP's are very happy with the current system. They are beneficiaries of various fees, discounts & services, which some might call Kickbacks. Any damages awarded to TPP's should, and probably will, eventually be turned over to the true victims: government healthcare programs and U.S. Taxpayers." (Pharma Fraud)
See what people are saying about Pharma:
- Judge Determines 3 Drug Companies Violated Law (BNP's Damozel)
- Govt. Contractors: Driving up Healthcare Costs (BNP's The Crux)
- Court Opinion (courtesy of Prescription Access Litigation Project)
- Big Pharma Loses Big in Massachusetts... (Patent Docs)
- ...Winning One in Beantown (Wall Street Journal Law Blog)
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