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Medicare Drug Program
Big Drug Companies Under Fire for Paying Off
Generics to Delay Drugs
Feds join suit against Abbott Laboratories
over inflated prices
 May 19,2006 – Big pharmaceutical companies are
coming under fire from two fronts, today, as two Senate Democrats ask
the industry associations to oppose brand-name drug makers from paying
generic makers to delay entry of the less expensive versions. And,
today, the Department of Justice joined a whistleblower lawsuit filed
over allegations that Abbott Laboratories between 1991 and 2001 inflated
the prices of its products to allow hospitals to receive higher Medicare
and Medicaid reimbursements.
 Lawmakers Ask Pharmaceutical Industry Groups To
Oppose Agreements To Delay Market Entry for Generic Medications
Sen. Charles Schumer (D-N.Y.) and Rep. Henry Waxman
(D-Calif.) on Wednesday sent letters to the
Pharmaceutical Research Manufacturers of America and the
Generic Pharmaceutical Association that asked the groups to oppose
agreements in which brand-name pharmaceutical companies pay generic
pharmaceutical companies to delay market entry of their products,
CQ HealthBeat reports.
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According to the letters, such agreements are
"improperly delaying consumer access to generic medications" (Sedlar, CQ
HealthBeat, 5/17).
The
Federal Trade Commission since the late 1990s had prevented such
agreements, but late last year the U.S. Court of Appeals for the 11th
Circuit ruled that the commission did not have the authority to take
such action.
According to an FTC report released in late April,
pharmaceutical companies reached three such agreements in fiscal year
2005 and have reached at least seven in the current fiscal year (Kaiser
Daily Health Policy Report, 4/25).
In a statement, Waxman said that the report
indicates "drug companies are returning to practices that severely
restrict Americans' access to affordable medications."
Kathleen Jaeger, president and CEO of GPhA, said,
"Clearly we want to ensure that Americans have timely access to generic
medicine," but such agreements "must be evaluated on an individual
basis."
A PhRMA spokesperson declined to comment on the
letters (CQ HealthBeat, 5/17).
Department of Justice Joins Lawsuit Alleging
Abbott Laboratories Inflated Drug Prices for Medicare, Medicaid
Beneficiaries
The
Department of Justice on Thursday joined a whistleblower lawsuit
filed over allegations that
Abbott Laboratories between 1991 and 2001 inflated the prices of its
products to allow hospitals to receive higher Medicare and Medicaid
reimbursements, the Wall Street Journal reports.
The products were sold by Abbott's Hospital
Products Division, which was spun off as
Hospira in 2004. Hospira also is named in the suit (Carreyrou, Wall
Street Journal, 5/19). The lawsuit was filed in 1995 by Ven-A-Care, a
small Florida pharmacy that has participated in other, similar lawsuits
(Dorschner,
Miami Herald, 5/19).
According to the lawsuit, drug prices reported to
the Drug Topics Red Book and other pricing sources in some cases were
1,000% higher than prices charged to providers (Wall Street Journal,
5/19).
For example, Abbott increased the reported price of
vancomycin, an intravenous antibiotic, to as high as 18 times what it
actually charged health care providers, the lawsuit alleges (AP/Los
Angeles Times, 5/19).
According to the Journal, inflated prices would
have given doctors and hospitals an opportunity to "reap big profits" by
prescribing Abbott's drugs, thus encouraging the use of Abbott drugs and
increasing profits for the company (Wall Street Journal, 5/19).
Overall,
CMS paid more than $175 million for Abbott's products during the
period in question, according to DOJ (Appleby,
USA Today, 5/19). DOJ said that under the False Claims Act it can
recover three times the amount of damages assessed by a jury, in
addition to $5,500 to $11,000 for each fraudulent reimbursement (Wall
Street Journal, 5/19).
Comments
Assistant Attorney General Peter Keisler said the "complaint marks
another step in the government's investigation and prosecution of
pharmaceutical manufacturers who submit fraudulent drug-pricing
information."
Abbott spokesperson Melissa Brotz said the company
has followed all laws and regulations and will defend itself against the
lawsuit (USA Today, 5/19). A Hospira spokesperson said the company
consistently adhered to pricing laws and noted that the company did not
exist when the alleged price inflation occurred (Wall Street Journal,
5/19).
"Reprinted with
permission from kaisernetwork.org You can view the entire
Kaiser Daily Health Policy Report, search the archives, and sign up
for email delivery at
www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser
Daily Health Policy Report is published for
kaisernetwork.org, a free service of The Henry J. Kaiser Family
Foundation. © 2006 Advisory Board Company and Kaiser Family Foundation.
All rights reserved.”
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