WISCONSINREPORT.COM (02/17/2009) - A Dane County jury has found a pharmaceutical manufacturer defrauded the Wisconsin Medicaid program by reporting grossly inflated and fraudulent prices. In a case brought by the Wisconsin Department of Justice against Pharmacia, after a two-week trial, the jury determined that Pharmacia should pay $9 million to compensate the state for its monetary losses. The jury considered allegations of both Medicaid and consumer fraud, and found that Pharmacia violated both laws.
$7 million was awarded to compensate the state for monetary losses due to Medicaid fraud; $2 million was awarded because of the company’s violation of consumer protection laws.
In addition to the award, the jury found that Pharmacia violated the Medicaid Fraud law 1,440,000 times. Under Wisconsin's Medicaid fraud forfeiture statute, the Court may award a minimum of $100 per violation up to a maximum of $15,000 per violation. A dispositional hearing has not yet been scheduled to determine the amount of forfeitures that Pharmacia will have to pay the State.
“This verdict confirms that Pharmacia knew when it published false average wholesale prices for its drugs it would cause the state to grossly overpay for prescription drugs,” stated Van Hollen. “Those fraudulent price reports cheated the taxpayers of Wisconsin. I won’t tolerate fraud.”
“Government must safeguard taxpayer money,” Van Hollen stated. “This means finding efficiencies, as I’ve done, and also enforcing our laws against fraud, as this case demonstrates. This case is a victory for taxpayers.”
Under Wisconsin law it is unlawful to make representations with the intent to sell pharmaceuticals when the representations are untrue, deceptive or misleading. Each defendant company allegedly indentified average wholesale prices (“AWPs”) for their drugs which were provided to a pricing compendium relied on by the Medicaid program to reimburse pharmacists.
The jury verdict confirmed the allegation that Pharmacia benefited from the scheme because it was able to attract business and market its pharmaceuticals to health care providers by using the inflated prices to reimburse the providers far more than they actually paid for the drugs. As a result, Pharmacia increased its market share and profits. Meanwhile Medicaid was paying a price based on the grossly inflated, fraudulent AWP.
Pharmacia argued that the AWP was a “sticker price” or a “benchmark” and that Wisconsin knew it did not represent an actual price. Van Hollen noted that the system worked in the 70s and 80s; it only became problematic when pharmaceutical companies started to treat AWPs as fictitious numbers to increase profits. He said that there was an easy way for the pharmaceutical companies to resolve the issue: “The fix is simple. Just tell the truth.”
The Wisconsin Department of Justice has filed similar claims against 35 other pharmaceutical manufacturers. Three of the manufacturers have settled with the state, agreeing to pay over $3 million to resolve the claims.
The Wisconsin verdict follows similar jury verdicts in Alabama and Missouri. There are approximately 25 other states with some form of similar pharmaceutical pricing litigation pending.