May 5, 2005
Texas Attorney General Greg Abbott has filed a lawsuit against 12 drug manufacturers for ignoring a three-year-old state law that requires them to report the average manufacturer price (AMPs) of Medicaid-covered drugs to the Texas Health and Human Services Commission (HHSC).
The suit seeks a permanent injunction to compel the companies to file accurate prices with the government, as required by Texas law. Average prices are defined as the prices wholesalers pay to manufacturers for drugs they then distribute to retail pharmacies, less any customary volume purchase discounts and incentives for prompt payment.
"The negligence of these companies have shown in obeying the law can drive up the health care costs paid by Medicaid for needy Texans," said Attorney General Abbott. "The state must have the most timely and accurate price information from drug manufacturers so Texas taxpayers will not be forced to pay more than necessary for prescription drugs for indigent people.
We have taken this action today to see that these companies comply."Prior to filing suit, the Attorney General sent letters to 160 companies, notifying them of the requirement to file average prices with the state. In response to those letters, the vast majority of the companies promptly began filing the prices. The 12 defendants named today are the only companies that failed to respond to the Attorney Generals demand letter.
The HHSC reimburses pharmacies for prescription drugs purchased by Texans who are insured by the states Medicaid, Children with Special Health Care Needs, Kidney Health Care and Childrens Health Insurance programs.
The agency accomplishes this by estimating the pharmacies acquisition cost for prescription drugs, then paying the pharmacies this estimated cost, plus a dispensing fee based on the number of prescriptions filled.
The average prices help the HHSC ensure the reimbursement amount it pays to pharmacies is accurate. Attorney General Abbotts lawsuit claims the manufacturers failure to file price averages can increase the cost of the states prescription drug benefit program if the HHSC reimburses pharmacies for more than the drugs actual cost.
The following companies are being sued by the Attorney General for failure to file average manufacturers' prices for Medicaid drugs:
• Healthpoint, LTD, Fort Worth, Texas
• Clay-Park Labs, Bronx, New York
• Fougera, a Division of Altana, Inc., Melville, New York
• ESP Pharma, Inc., Edison, New Jersey
• Hercon Laboratories Corporation, Emigsville, Pennsylvania
• LifeCycle Ventures, c/o PDI, Inc., Upper Saddle River, New Jersey
• Person & Covey,Inc., Glendale, California
• Pharmaceutical Associates, Inc., Tampa, Florida
• Pharmascience Laboratories, Inc., Tonawanda, New York
• Savage Laboratories c/o Altana, Inc., Melville, New York
• Somerset Pharmaceuticals, Inc., Tampa, Florida
• American Pharmaceutical Partners, Schaumburg, Illinois
