Medicare Compliance & Reimbursement

Pharmaceutical companies across the country are coming increasingly under the gun as state attorneys general nationwide take them to task for allegedly ripping of Medicaid and Medicare by manipulating reported drug prices. In the latest move, Connecticut AG Richard Blumenthal says he plans to sue seven drugmakers for illegally playing fast and loose with the “average wholesale price,” a figure used to calculate Medicare and, in most states, Medicaid, reimbursement.

Blumenthal maintains that the defendant companies’ artificial inflation of the AWP forced the state to pay far too much for their products. He says that providers are offered the drugs at rates far less than the AWP — which means that they can pocket the sometimes-huge difference between what they pay for the drug and what they can collect from Medicaid. That created a huge inducement to use products with large spreads, all at the expense of state and federal health care programs.

The AG is seeking to recover more than $15 million in Medicaid overcharges, along with civil penalties. In addition, he’s going after an as-yet undisclosed amount on behalf of Connecticut residents who paid higher copays than they should have.

Lesson Learned: Drugmakers should be warned that the long-running AWP imbroglio is by no means losing steam.

The targeted pharma companies are Schering-Plough Corp., GlaxoSmithKline, Aventis, Dey Inc., Roxane Laboratories Inc., Warrick Pharmaceuticals and Pharmacia Corp.

Former Nevada AG Frankie Sue Del Papa was the first state official to file an AWP suit. States that have subsequently jumped on the bandwagon include Minnesota, Montana and Texas.