04 June 2004
Wisconsin AG Sues Drug Manufacturers
MADISON, Wis. - Wisconsin Attorney General Peg Lautenschlager filed a lawsuit Thursday accusing 20 major drug manufacturers across the nation of inflating wholesale prices and driving up costs for health care programs for the poor and other drug buyers.
According to the lawsuit, filed in Dane County Circuit Court, the manufacturers "embarked on an unlawful scheme" at least as early as 1992 to distort the drug pricing system.
The suit seeks to force the manufacturers to stop the practice and set up a restitution program for citizens, private payers and state health programs. It also seeks forfeitures of up to $10,000 per violation if the court finds the violations were against senior citizens.
Lautenschlager declined to comment on how much restitution and forfeitures could total, saying only "the numbers are very large."
Manufacturers named in the lawsuit include Pfizer Inc., Johnson & Johnson, Inc. and Bayer Corp.
Pfizer spokesman Bryant Haskins said he couldn't comment extensively because the lawsuit is pending, but said Congress has known about variations in wholesale and list prices for years.
"Discussion and change should take place in Congress and not in court systems," he said.
Bayer and Johnson & Johnson officials said they hadn't seen the lawsuit and declined comment.
The lawsuit is another step by Wisconsin to combat skyrocketing prescription drug prices.
The state began SeniorCare, a prescription drug discount program for senior citizens, in 2002, and earlier this year Gov. Jim Doyle launched a Web site allowing people to download mail-order forms for cheaper drugs from Canadian pharmacies.
Coalition of Wisconsin Aging Groups executive director Tom Frazier said the allegations in the lawsuit have added to senior citizens' anger over high prescription drug prices.
"Seniors, I think, are outraged about it. The marketing, the deception, the Canadian stuff," Frazier said, referring to U.S. Food and Drug Administration warnings not to buy cheaper Canadian drugs because they may be unsafe.
The lawsuit alleges the manufacturers inflated wholesale prices for their drugs, deeply discounted the published wholesale prices for some customers and kept the discounts secret.
According to the lawsuit:
The manufacturers supply inflated wholesale prices to medical publications, which federal and state agencies as well as private payers such as HMOs use as a basis for drug reimbursements.
Providers such as physicians and hospitals buy the products at a lower price and use the false wholesale rate to get bigger reimbursements and drive up their profits.
Pfizer officials said the medical publications, not their company as the lawsuit contends, set the wholesale prices for their products on their own.
The plan enabled drug providers in Wisconsin's Medicaid program to charge the state false prices and interfered with the state's ability to set reasonable reimbursement rates for the drugs, the lawsuit said.
The Medicaid program provides medical benefits, including prescription drugs, to low income and disabled people. The program is jointly funded by the state and the federal government. It reimburses physicians and pharmacies for drugs and other services they provide.
Medicare is a federal insurance program that covers senior citizens and some disabled people. It covers some prescription drugs.
More than 700,000 Wisconsin residents are entitled to reimbursement under the section of Medicare that covers their medicines, the lawsuit said.
The attorneys general of 13 other states already have sued drug manufacturers for allegedly breaking wholesale pricing laws. Those suits are pending.
TODD RICHMOND
Associated Press, Jun. 03, 2004
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