TAP Pharmaceuticals to Pay Record Fine Over Drug Pricing
TAP Pharmaceutical Products will likely pay a fine of more than $840 million to settle federal allegations that it inflated the price of its "top-selling" prostate cancer drug Lupron Depot, the Boston Globe reports. Federal prosecutors allege that TAP "artificially inflated" the official average wholesale price -- the price used as a guideline for setting Medicare and Medicaid reimbursement rates -- as a means to "increase sales and profits." TAP allegedly would then sell Lupron to physicians for about $100 to $150 less per one-month dose and then "encourage" doctors to bill the government and other insurers for the higher amount. Investigators say TAP was "boldly using [this scheme] as a selling point," and physicians usually made about 25% profit on the total bill. TAP also allegedly offered doctors as much as $70,000 in free drug samples and told them to "bill insurers as if they had purchased it," even though billing for free samples is a violation of federal law. Court documents reveal that some doctors pocketed as much as $400 to $550 per sample. TAP also was charged with offering an "unnamed" Massachusetts managed care company $65,000 "in an attempt to get it to switch from using a competing drug."
Medicare beneficiaries taking Lupron often paid more than $1,000 in co-payments per year for the drug, and some patients have filed a separate class-action lawsuit against TAP alleging that they were "overcharged by millions of dollars." Over the past 10 years, Medicare has paid "billions" of dollars for Lupron, and some government investigators believe the program paid "at least $100 million a year more than it should have" for the drug. "It's a ripoff of Medicare and the patients who paid their 20% co-payments," Jeffrey Kodroff, lead attorney for the class-action suit, said. Meanwhile, several states are investigating whether Medicaid was "bilked" as well. Kim Modory, a TAP spokesperson, declined to comment on the class-action suit or the company's marketing practices but said that the company "conducts its business ethically" (Dembner, Boston Globe, 5/28). Since its approval by the FDA in 1985, Lupron sales have "risen steadily," totalling more than $800 million in 2000 (Hale, Los Angeles Times, 5/29). A settlement in the federal case is likely to be announced within the next few weeks.
TAP is "expected" to pay the government "what could be the largest fine ever in a federal health fraud case," topping the $840 million fine paid last year by Columbia/HCA Healthcare Corp., the Globe reports. The settlement is "likely" to include a guilty plea to criminal fraud charges, along with a civil penalty for false claims. In addition, other firms and individuals may be subject to further prosecution (Boston Globe, 5/28).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.