Prescription Drug Price Fraud Increases Medi-Cal Costs, Lockyer Says
Medi-Cal has overpaid prescription drug makers by "hundreds of millions of dollars" because of "fraudulent pricing practices," Attorney General Bill Lockyer (D) said Tuesday, the Los Angeles Times reports. Prescription drug costs is "one of the fastest growing segments of Medi-Cal's $30 billion budget," according to the Times. Between 1997 and 2001, Medi-Cal's prescription drug costs increased from $1.55 billion to $3.11 billion, and they have continued to rise. Collin Wong, chief of the attorney general's Medi-Cal fraud bureau, said the program has reimbursed pharmacies and doctors up to 10 times more than it should have for drugs. For example, Medi-Cal paid $14.55 for bags of saline solution that cost $1.23 each; $55.59 for the antibiotic Vancomycin HCL, which cost $6.29; and $5.92 for 50 milliliters of sodium bicarbonate, which cost providers 62 cents. Stan Rosenstein, deputy director of medical services for Medi-Cal, said that the Medi-Cal reimbursement rates for pharmaceutical products is equal to the average wholesale price of a product less 10%, but said that when pharmaceutical companies overstate wholesale prices, it is a "significant problem" for Medi-Cal. Wong said Lockyer is sponsoring legislation to require all pharmaceutical manufacturers to provide Medi-Cal with accurate pricing information, adding, "We want to end what arguably is the single largest cause of Medi-Cal fraud and abuse." Lockyer also is planning to release on Wednesday a 10-point plan for resolving fraud and abuse problems in Medi-Cal as part of his ongoing effort to address the issue. In the last five years, Lockyer's office has filed 700 criminal cases against Medi-Cal providers and 50 civil suits (Reiterman, Los Angeles Times, 4/21). In addition, in January 2003 Lockyer filed an action in Los Angeles County Superior Court against Abbott Laboratories and Wyeth Pharmaceuticals, alleging that both firms conducted "grossly excessive, unreasonable and unlawful" inflation of drug prices and as a result increased costs in Medi-Cal. In the suit, 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 (California Healthline, 1/8/03). The case against Abbott and Wyeth has been consolidated with other state lawsuits and has been moved to federal court in Boston (Los Angeles Times, 4/21).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.