Nixon sues four drug companies for overstating prices

Thursday, December 22, 2005

JEFFERSON CITY, Mo. -- Missouri Attorney General Jay Nixon sued four drug companies Wednesday for allegedly bilking the state out of $19 million over the past decade by inflating Medicaid prescription drug prices.

Nixon's lawsuit claims the companies sold drugs at one price to Medicaid providers such as pharmacies, then reported a much higher price to the state, which reimbursed the providers.

"This is a significant example of waste, fraud and abuse in the Medicaid system," Nixon said in a news release.

The lawsuits filed in St. Louis City Circuit Court names as defendants Boehringer Ingelheim Roxane Inc., Mylan Laboratories Inc., Teva Pharmaceuticals Inc. and Watson Pharmaceuticals Inc.

The state alleges the four companies reported to the state a higher price for the antibiotics and anxiety and heartburn medicines they sold to pharmacies. By reporting that the drugs are more expensive than they really are, the pharmacies reap the benefit. In turn, they continue to buy their drugs from the drug companies.

Mark Vincent, a spokesman for Boehringer Ingelheim, declined to comment because the company has not been served with the suit.

A spokesman for Nixon said the investigation focuses on the pharmaceutical companies that inflated the cost of the drugs and not the providers that accepted the additional profits because the attorney general's office believes the drug companies rather than the providers most likely initiated it.

"What we were concerned about is the manipulation of these prices, and that was the pharmaceutical companies that were doing that," spokesman Scott Holste said.

Under state law, each instance of reporting a false claim carries a fine of $5,000 to $10,000 and damages of up to three times the amount overpaid. The suit also asks for sufficient punitive damages to dissuade other companies from using a similar scheme.

Each of the four companies has faced lawsuits in other states related to overstating the cost of Medicaid prescription drugs. Holste said the state became aware of the alleged scheme as a result of similar litigation in Florida.

The attorney general's office filed a similar case in May against Dey Inc. and Warrick Pharmaceuticals Corp. in St. Louis City Circuit Court.

A secretary for Mylan spokesman Patrick Fitzgerald said he was unavailable for comment. And spokeswomen for Teva and Watson did not immediately return calls seeking comment.

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