Eight prescription drug makers have agreed to pay $4.3 million to settle allegations that they purposefully reported false and inflated drug prices, which serve as the basis for Medicaid reimbursements paid by taxpayers, according to an Iowa Office of the Attorney General news release.
Attorney General Tom Miller filed a lawsuit in Oct. 2007 alleging that 78 pharmaceutical companies used unlawful pricing schemes that resulted in overcharges of millions of dollars to the Iowa Medicaid Program, which spent more than $1.6 billion for the 78 companies' drugs between 1992 and 2005.
Medicaid programs reimburse medical providers for prescription drugs. By federal law, providers are reimbursed on the basis of their estimated acquisition cost of the drugs, plus a dispensing fee for filling the prescription. Iowa and almost all states rely on the "average wholesale price" to arrive at the estimated acquisition cost. Average wholesale prices for specific drugs are supplied by the drug makers and published in compendiums by entities such as First Databank and McKesson Corp.
The problem, the lawsuit alleged, is that average wholesale prices — prices supplied by the drug manufacturers — did not accurately reflect the prices providers actually paid for the drug manufacturers' products.
The suit alleged pharmaceutical companies knew the prices they reported were false, and often grossly inflated. The suit alleged that the price for drugs paid by the state exceeded 40-50 percent, 100 percent, 200 percent or even 1000 percent or more of the real prices providers pay for prescription drugs.
The eight companies to settle are Dey, Abbott Laboratories, Amgen, Baxter, Ben Venue Laboratories, Boehringer Ingelheim Roxane, Immunex Corp. and Roxane Laboratories. The companies denied any wrongdoing.
Dey is paying $1.8 million in its settlement. The other group of seven is paying a total of $2.5 million. Since Iowa's Medicaid program is funded significantly with federal moneys, about 60 percent of the settlement payments will go to the federal government, according to the release.
Read the Attorney General's release on the prescription drug maker settlements.
Attorney General Tom Miller filed a lawsuit in Oct. 2007 alleging that 78 pharmaceutical companies used unlawful pricing schemes that resulted in overcharges of millions of dollars to the Iowa Medicaid Program, which spent more than $1.6 billion for the 78 companies' drugs between 1992 and 2005.
Medicaid programs reimburse medical providers for prescription drugs. By federal law, providers are reimbursed on the basis of their estimated acquisition cost of the drugs, plus a dispensing fee for filling the prescription. Iowa and almost all states rely on the "average wholesale price" to arrive at the estimated acquisition cost. Average wholesale prices for specific drugs are supplied by the drug makers and published in compendiums by entities such as First Databank and McKesson Corp.
The problem, the lawsuit alleged, is that average wholesale prices — prices supplied by the drug manufacturers — did not accurately reflect the prices providers actually paid for the drug manufacturers' products.
The suit alleged pharmaceutical companies knew the prices they reported were false, and often grossly inflated. The suit alleged that the price for drugs paid by the state exceeded 40-50 percent, 100 percent, 200 percent or even 1000 percent or more of the real prices providers pay for prescription drugs.
The eight companies to settle are Dey, Abbott Laboratories, Amgen, Baxter, Ben Venue Laboratories, Boehringer Ingelheim Roxane, Immunex Corp. and Roxane Laboratories. The companies denied any wrongdoing.
Dey is paying $1.8 million in its settlement. The other group of seven is paying a total of $2.5 million. Since Iowa's Medicaid program is funded significantly with federal moneys, about 60 percent of the settlement payments will go to the federal government, according to the release.
Read the Attorney General's release on the prescription drug maker settlements.