Attorney General Lockyer Files Suit Against Abbott, Wyeth Alleging They Overcharge Medi-Cal
Attorney General Bill Lockyer (D) on Tuesday filed a lawsuit against drug companies Abbott and Wyeth, alleging that both firms conducted "grossly excessive, unreasonable and unlawful" inflation of drug prices and as a result increased costs in Medi-Cal, the Los Angeles Times reports. The suit, filed in Los Angeles Superior Court, says that the companies overstated average wholesale prices used to determine reimbursements, resulting in Medi-Cal's overpaying the companies (White/Reiterman, Los Angeles Times, 1/8). Lockyer said, "The drug makers hid the true costs of their drugs so that Medi-Cal reimbursements would be artificially inflated. We believe this kind of illegal conduct bloated some drug prices by up to 1,198% and contributed to soaring health care costs" for those enrolled in Medi-Cal (Japsen, Chicago Tribune, 1/8). He noted that between 1997 and 2001, Medi-Cal drug costs doubled to $3 billion per year, while enrollment dropped 15%.
Lockyer said, "This prescription drug pricing fraud took advantage of sick patients and cost California taxpayers tens of millions of dollars in unnecessary health care costs" (Los Angeles Times, 1/8). The state is seeking damages of three times the amount of the alleged price inflation, in addition to civil penalties that could reach $10,000 for each claim, according to the Times. In a statement, Abbott officials said that the company had "consistently complied with all pricing laws and regulations" and had "properly and lawfully provided information to the government." Officials added that the company "intends to vigorously defend ourselves against these claims." Wyeth spokesperson Doug Petkus did not comment on the lawsuit (Los Angeles Times, 1/8).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.