December 17, 2009
Drug giant Schering-Plough Corporation, accused by the state of California of deliberately inflating the price of Albuterol and other drugs, will pay $21.3 to settle the state's lawsuit.
Albuterol is a widely prescribed generic drug, delivered through inhalers, nebulizers and masks, and used to treat asthma and other breathing problems.
"With health care costs spiraling out of control, it's unconscionable that a Fortune 500 pharmaceutical company deliberately inflated its drug prices to cheat California's public health care system out of millions of dollars," said California Attorney General Jerry Brown. "This is a company that made more than $12 billion in profits last year, yet still raided the pockets of California taxpayers."
The settlement stems from a lawsuit filed by a whistleblower against several pharmaceutical companies accused of Medicaid fraud. The case is still proceeding against Dey, Inc., Mylan Pharmaceuticals, Inc., Sandoz, Inc. and their parent companies. Schering-Plough recently merged with Merck, and is now known as Merck & Co.
California's $21.3 million agreement is one of three settlements negotiated with Schering-Plough, collectively totaling $69 million, over falsely inflated drug prices. The three lawsuits were originally filed by a whistleblower, Ven-A-Care of the Florida Keys, Inc., on behalf of California, Florida and the federal government. Schering-Plough also reached settlements with Florida and the federal government, the latter for approximately $44.5 million.
The settlement resolves allegations that Warrick Pharmaceuticals, a subsidiary of Schering-Plough, deliberately inflated the average wholesale prices it reported to California for Albuterol. Medi-Cal sets the reimbursement rates for pharmacies for many of the drugs dispensed to Medi-Cal patients based on the AWPs reported by drug manufacturers.
California pharmacies dispensed Albuterol to patients and were then reimbursed by Medi-Cal. By reporting falsely inflated AWPs, some drug manufacturers caused Medi-Cal to overpay millions of dollars in pharmacy reimbursement, Brown says. Medi-Cal is funded on a roughly 50-50 basis by the federal government and the state of California.
