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Drug Firms Accused of Fraud

December 20, 2001
A coalition of consumer groups has filed a class action lawsuit charging 28 pharmaceutical companies with defrauding Medicare patients by inflating the prices of drugs sold to the government program.

The suit was filed in Boston federal court by the Prescription Drug Access Litigation Project, an umbrella organization that has led 25 lawsuits against drug companies this year. It estimates that Medicare and individual consumers were overcharged by more than $800 million in 2000.

Basically, the suit charges that the companies have overstated their average wholesale price, as a way of overcharging Medicare. Drug companies are required to give a discount to Medicare. The discount is based on average wholesale prices which the drug companies post in industry newsletters and Web sites. The suit charges that, in fact, drug companies sold drugs to doctors for much less than Medicare but failed to accurately report those sales.

Although Medicare does not cover the cost of prescription drugs dispensed to individuals, it does cover the cost of medicines dispensed in doctors' offices and hospitals and certain types of drugs, including inhalants, that are administered by patients in their homes. Patients typically pay 20 percent of the cost of such drugs, commonly called the co-pay.

The suit notes public reports that the Department of Justice, the Department of Health and Human Services and Congress have all investigated pharmaceutical companies for defrauding Medicare and it cites documents from those investigations.

Defendants include most of the major drug companies, including Bristol-Myers Squibb, Eli Lilly and Co., GlaxoSmithKline and Schering-Plough Corp.

A substantial list of drugs that have been the subject of this practice has been compiled. Please call Marc H. Edelson, Esquire or Alan V. Klein, Esquire of Hoffman & Edelson, LLC at (215) 230-8043 if you are interested in determining whether a medication you were prescribed and paid for is the subject of this litigation.

To the extent that you have paid a portion of the 20% co-payment amount for the drugs at issue, you would be entitled to share in any proceeds in the event the litigation is successful. Some of the covered drugs include: Acyclovir Sodium, Sodium Chloride, Gammagard, Kogenate, Blenoxane, Estophos, Etopside, Zofran, Kytril and Albuterol Sulfate.

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