Below is a Dec. 20 news release from the Prescription Access Litigation project regarding a federal lawsuit charging 28 Drug Companies with RICO, state and federal anti-trust, and consumer protection violations.
Contact:
Laurie Covens, Community Catalyst/PAL Phone: 617 275-2805, Cell: 617-947-4834
Nadia Khatchadourian
(202)478-6187
Consumer
Groups Charge
Industry-Wide Price Manipulation - Over $800 Million in
Illegal Profits from Medicare & Medicare Patients
Federal
Lawsuit Charges 28 Drug Companies with RICO,
State and Federal Anti-Trust, and Consumer Protection Violations
BOSTON, Dec. 20, 2001 - In litigation that targets 28 U.S. drug companies for manipulating the "average wholesale price" of drugs covered by Medicare, the Prescription Access Litigation (PAL) project has filed suit in state and federal court to stop what is deemed to be an industry-wide scheme to defraud the U.S. health care consumer by charging inflated prices for critically-needed medications. A total of 14 coalitions representing health care consumers in 11 states have filed the litigation, which seeks both injunctive relief and damages to stop what it terms the manufacturers' "monopolistic, anticompetitive conduct."
Filed Wednesday in the Massachusetts District of the U.S. District Court, the lawsuit charges that since 1993 the companies have engaged in "a pattern and practice" of selling drugs to physicians at prices well below the reimbursement cost charged to Medicare. Medicare reimbursement levels are set according to the "average wholesale price" - or AWP -- listed in industry-wide pricing lists, such as the Red Book and Medispan. The lawsuit says the drug companies have unfairly promoted the sale of their products by charging doctors far less than the AWP listed-with discounts that have ranged from 13% -34%, and sometimes swelled to as much as a 65% and 85% differentials for particular drugs. The plaintiffs estimate that Medicare and individual consumers using the drugs were overcharged more than $800 million in illegal costs last year alone.
The Boston-based Prescription Access Litigation (PAL) Project has previously filed 25 lawsuits targeting the pharmaceutical industry for illegal practices used to monopolize the market and swell prescription drug spending. Pharmaceutical costs are universally acknowledged to be the major cause of the U.S. health care cost crisis. The new litigation on AWP manipulation comes on the heels of other lawsuits in which PAL has targeted illegal agreements between brand-name and generic companies, deceptive Direct-To-Consumer advertising, and manipulation of patent laws.
"With this lawsuit, we're focusing on AWP manipulation-which has absolutely got to stop, " said PAL spokesperson Susan Sherry. "But if you put all the pieces together, all the lawsuits PAL has filed, the picture that emerges is that this is an industry in serious need of reform. Anti-trust violations, false advertising, fraudulent practices -- this is not a pretty picture."
In a list of companies that reads like a "Who's who?" of the pharmaceutical industry, the PAL litigation lists 28 companies that it accuses of AWP manipulation. They include Abbott Laboratories, Inc.; American Home Products; AstraZeneca US; Aventis Pharma; Bayer AG; Baxter International; Bristol-Myers Squibb Co.; Fugisawa Healthcare, Inc.; Glaxosmithkline; GlaxoWellcome; Hoescht Marion Roussel; Eli Lilly and Co.; Schering-Plough; and TAP Pharmaceuticals.
The drugs cited in the lawsuit include Ativan (used to treat convulsive disorders, such as epilepsy, and panic attacks); Calcijex or Rocaltrol (used to treat hypoglycemia associated with kidney failure, and to treat rickets); Cleocin (used to treat bacterial infections); Valium (used to treat convulsive disorders, such as epilepsy, and to treat anxiety and panic attacks); and Ventolin or Volmax (used to treat and/or prevent asthma, chronic bronchitis, emphysema, and other lung diseases).
Thomas Sobol, lead attorney for the plaintiff organizations said, "This AWP manipulation has gone on for years, as we know from repeated federal investigations and recommendations. Our plaintiffs - from states across the U.S. -- are saying this can't be tolerated any longer. The point is, it's time to put an end to this price gouging-and suing the industry is clearly the only way to do it."
Medicare covers drugs administered in hospitals, doctors' offices, and clinics. This lawsuit focuses on those drugs requiring patients to make 20 percent co-payment, which is paid either out-of-pocket, or through premiums to medi-gap insurers.
As the PAL coalition noted in its federal complaint, the problem of AWP manipulation is not new. The complaint notes that a series of federal investigations by the Office of the Inspector General at the Department of Justice, the United States General Accounting Office, subcommittees of the Congressional Committee on Energy and Commerce and of the Committee on Ways and Means, and HHS have thoroughly established that this pricing tactic is widespread and costly to both consumers and the federal government. The practice was first identified in 1967 and documented as recently as October 2001 by the GAO.
Representing the elderly health care consumers who are most harmed by this Medicare pricing fraud, the PAL coalition groups that have joined the litigation are: Citizens for Consumer Justice; Colorado Progressive Coalition; Congress of California Seniors; Florida Alliance for Retired Americans; Health Care For All of Massachusetts; Massachusetts Senior Action Council; MassPIRG; Minnesota Senior Federation; New Jersey Citizen Action; New York State-Wide Senior Action Council; Pennsylvania Alliance for Retired Americans; Vermont Public Interest Research Group; West Virginia Citizen Action; and Wisconsin Citizen Action.
The effort is being led by PAL, a coalition of over 70 organizations in over 30 states which is also the nation's largest consumer health advocacy organization seeking enforcement of laws to combat the high price of prescription drugs. PAL was formed earlier this year by Boston-based Community Catalyst (www.communitycatalyst.org), a national consumer health advocacy organization, and the National Health Law Program (www.healthlaw.org), which is based in Washington, D.C.
The plaintiffs are represented by: Lieff, Cabraser, Heimann & Bernstein, LLP of San Francisco (www.lchb.com); New York-based Milberg Weiss Bershad Hynes & Lerach LLP (www.milberg.com); Carey & Danis, LLC of St. Louis (www.careydanis.com).