Bayer Corp. will Reduce Medicaid Rx Drug Prices
Bayer Corp., a U.S. subsidiary of Bayer AG, announced yesterday that the company would reduce prices on some prescription drugs purchased by the government after reaching a "trailblazing" Medicaid fraud settlement with state and federal regulators, the Chicago Tribune reports. Bayer would become the second major drug company to reduce prices this year amid allegations that U.S. drug companies "lied" to the government about the average wholesale prices of certain drugs. Under the settlement that Bayer signed last week, 45 states will share $14 million. The settlement caps a five-year agreement that will require Bayer to "make thorough disclosures" of the average wholesale prices -- which the government uses to set reimbursement rates -- that the company sets on drugs. In addition, investigators insisted on a "stringent, five-year price reporting procedure," known as a corporate integrity agreement. In the agreement, Bayer did not admit wrongdoing. The Tribune reports that the settlement with Bayer will likely serve as a model for similar agreements with up to 20 drugmakers still under investigation in a four-year-old state and federal drug pricing fraud probe. Estimates of Medicaid overpayments top $1 billion annually and "may be especially troubling" as lawmakers face increasing "political pressure" to establish a prescription drug benefit under Medicare, the Tribune reports. According to the Tribune, "It is not clear how much Bayer will drop its prices and on how many drugs" or "how much those cuts will save taxpayers." Medicaid officials said that they will receive a new Bayer price list by the end of the month, and the Tribune reports that "savings are expected to be significant" (Zajac/Japsen, Chicago Tribune, 8/14).