Florida sues drug company for Medicaid fraud

Apr 6 2005

Charlie Crist, Florida's Attorney General is taking three pharmaceutical companies to court for $25 million, accusing them of illegally inflating prices on generic drugs used to treat depression, schizophrenia, seizures and angina.

The lawsuit alleges that since1994, Sandoz Inc., Ivax Pharmaceuticals Inc., and Purepac Pharmaceutical Company, along with various parent and subsidiary companies, have overstated the prices of generic drugs in statements to the Medicaid program. Under the False Claims Act triple damages could be awarded and that would increase the state's potential recovery amount to $75 million.

Florida's Medicaid program reimburses medical providers for the drugs they dispense to Medicaid recipients and that reimbursement is based on the "average wholesale price" of the drug, which manufacturers are required to accurately report.

Crist says the three companies not only inflated reimbursements for providers, but used the practice to boost sales by "marketing the spread."

For example a hypertension drug was sold to pharmacies for $1.66, but the manufacturer told Medicaid the same quantity of the drug was priced at $14.25.

Crist is also pursuing a similar suit filed in July 2003 against three manufacturers charged with defrauding Medicaid.