State-Journal.com - Drug company owes us $14 million

The drug company’s defense attorney slumped in his chair when Franklin Circuit Judge Roger Crittenden read the jury’s verdict after more than two hours of deliberation.

AstraZeneca, maker of popular drugs such as Crestor, Nexium and Seroquel, must reimburse Kentucky $14.72 million after overcharging its Medicaid program between November 1999 and March 2005.

AstraZeneca lied when reporting its average wholesale price on a number of drugs, said George Galland, representing Kentucky in the civil fraud trial that ended Thursday.

AstraZeneca inflated its prices between 20 and 30 percent depending on the drug, Galland told the jury in his summation.

The average wholesale price is calculated by adding a percentage to the price wholesalers pay for the drug. The percentage, usually between 1 and 3 percent, represents a profit that the wholesalers get after selling the drugs to pharmacies.

Kentucky Medicaid, the state and federal program for the poor, uses the average wholesale price to reimburse pharmacies participating in the program.

By inflating its drug prices, AstraZeneca tried to control drug prices and set the state’s Medicaid program back $16 million, Galland told the jury.

“It’s proven that this broken system put Medicaid on a treadmill, chasing the proper discount. It started with false prices rather than having true prices to work with.”

While the jury’s decision was just shy of the $16 million lost claimed by the commonwealth, Attorney General Jack Conway said he was happy with the verdict.

“I appreciate the jury’s careful consideration of this matter and am pleased that we have been able to recover money for the Medicaid program and for Kentucky taxpayers,” Conway said in a statement.

“My office is committed to putting an end to this type of deception and ensuring that drug companies truthfully report their drug prices.”

The state wanted additional damages because of how long the practice went on and to send a message to other drug companies.

“We ask that punitive damages be awarded essentially to discourage the defendant from doing this again and to discourage others from doing this,” Galland said.

The jury gave the commonwealth $100 in punitive damages, which drew some snickers from the crowd.

Gerson Zweifach, representing AstraZeneca, argued in closing that the state’s Medicaid program was aware that average wholesale price was not an actual sales price for drugs, but rather a benchmark.

Zweifach also said the state didn’t do anything to fix the problem because “it helped maintain a network of participating pharmacies.”

“It’s time, and today would be a good time, for Kentucky Medicaid to take responsibility for the decisions they made,” Zweifach said.

The civil trial, filed in 2007, lasted 16 days.

This case is one of several that accuses major U.S. drug makers of civil Medicaid fraud throughout the nation. Several states are making cases against drug companies, charging them with hiking drug prices illegally.

Kentucky alone has sued 47 companies over the practice. The state has recovered nearly $100 million in Medicaid fraud since 2008, Conway said.

Kentucky was awarded $16 million in June from Novartis AG’s Sandoz unit for Medicaid civil fraud.

The state is taking GlaxoSmithKline, the United Kingdom’s leading drugmaker, to trial for fraud charges in November.

4.	Posted by trying October 16, 2009
	ronandlane, if you think that we are all pawns of the mega rich.. well, I think you are a pawn of the ultra left. Care to explain how the public option or even single payer would exactly take care of the problem? Sure you'd pay a nice low premium in the public option, but that's it. Single payer? They'll decide what treatments you get and what drugs you get. Wonder how much interest there'll be in medical advances, if the pay-off isn't there. And if you believe that public option(s) will keep costs down I'd like to refer you to Germany. It's either the government increases subsidies (which comes from increased tax) or your insurance premium increases (not insignificantly). So how exactly will costs be kept down by a public option? Where will the qualified doctors be? Nobody says we should leave things the way they are but to state that a public option will put a dent in the system and force them to keep costs down, well, quite frankly, that's ignorance at its best. Overhaul is needed, proper regulation is needed, but you'll never get it with the corrupt Washingtonians pulling the strings. You'll get the public option and it'll be none different than medicare. I had to laugh at the big show the insurance companies put on just last week lamenting about having to increase rates if health insurance isn't made mandatory. That ain't how the market works, lol. But seems they got what they wanted with that little stunt. You'll get your little public option. Ten years down the road you'll still be griping about how it didn't do what it was supposed to do. It won't lower costs and come with a host of problems. Why? Because yet again those in Washington couldn't get things right. Why? Because they don't read what they vote on, they believe what the party bosses tell them and what the incentive payers want them to believe. And right now they need to get in the 'victory' for the big man, the health care reform, ASAP. Doesn't matter if it's half-baked. By the time we'll figure out we have created our next money pit he'll be long gone. Inform yourself, read what this is all about, then form your own opinion. And stop listening to the tirades of whoever criticizes this in bed with the rich, Limbaugh (btw can't stand the guy) and Fox news (now being scapegoated by the WH and declared a non-news company... next they'll probably be taken off the air, lol,... wait isn't that going on in China and wherever else they want to suppress the truth... just food for thought). Stop following the leader like a herd (no matter what party) and start forming your own thoughts. This is an important matter. Blindly repeating what you have been told and what sounds good... well, it's stupid, because in this case, it ain't working the way you declare it should work.

2.	Posted by trying October 16, 2009
	A public option doesn't help that. Medicare is a public option and they got screwed. The pharmaceutical companies would still find a way to charge you and arm and a leg for the must have drug. Proper oversight and regulation would be much better. And letting generics come to market faster. Here in the US we are being robbed blind by the pharmaceutical companies. Here is where they make their profits. A public option ideally just functions like a regular insurance, just like medicare. Except, just like medicare, it's a subsidized insurance meaning that the general public will fund the difference so people can enjoy low insurance rates and full health care benefits. Look what happened to medicare in this case, the same could happen to the public option insurance. If a pharmaceutical company would have broken it's pricing policy with a regular insurance company, you'd have the same result. It's simply a breach of obligations. Nothing more, nothing less. They went to court, end of story. Sure, if we'd have single payer, we'd just say, if you don't take our price we don't have you on our approved list... oops, then we have to pay full and probably highly inflated price if we want the drug.