Posted At AZStarnet.com
BY : Howard Fischer
The state sued 20 major drug manufacturers and their subsidiaries Tuesday, claiming they defrauded Arizonans and their health insurers out of tens of millions of dollars through inflated ---- and purely artificial ---- drug price lists.
In a 204-page complaint filed in Maricopa County Superior Court, Attorney General Terry Goddard said the companies list "average wholesale prices" far above what they actually charge for the drugs.
What makes that significant is individuals and insurance companies are being billed---- and paying ---- a percentage of the inflated list price. And those differences can be huge. Goddard said the difference between the real prices and the listed prices were double, triple and more in some cases.
For example, he said one company listed its average wholesale price for an anti-anemia drug at $184.40, while the U.S. Justice Department determined it actually was available for $2.76. Other companies were selling sodium chloride ---- essentially a sterile salt solution used as a flush ---- for less than $4 a dose while listing prices in excess of $670.
While the lawsuit names only the drug companies at this point, Arizona doctors and pharmacy benefit managers also could find themselves in legal trouble. The suit claims they also are aware of, and benefit from, the artificial system.In fact, Goddard's lawsuit says some drug companies provided free products to doctors, with the understanding that they would, in turn, bill their patients and insurance companies for those products. That action, which Goddard said violates federal law, is an inducement to doctors to keep buying those specific drugs because they get to pocket more money.
None of the drug companies could be reached late Tuesday. Consumers are affected because health-care companies use the average wholesale price as an indicator of the real cost of the drug. That amount, minus some negotiated discount, becomes the amount insurers reimburse doctors and pharmacy benefit managers.
What has happened, Goddard said, is "a perversion" of the system. He said drug companies promote their medicines "not based on lower prices" but on "fictitious and inflated" wholesale prices that allow physicians, retailers and pharmacy benefit managers to make inflated profits. Those inflated profits encourage drug distributors to order more drugs from these firms.
Individuals also can get hurt. For example, the state's own "Copper Card" prescription-drug discount program is administered by a private company that provides medications to those enrolled at varying percentage discounts off average wholesale prices.
And Goddard said seniors enrolled in Medicare pay more. He noted that Medicare already covered some drugs before the change in law, with the government paying 80 percent and the balance passed on to the patient. He said if the average wholesale price is inflated, then that 20 percent co-payment also is inflated.
