Pharmaceutical companies overcharging federal health care programs

Feb 25 2007

Pharmaceutical companies have been systematically overcharging federal health care programs, costing taxpayers billions of dollars, according to federal officials, members of Congress and an advocacy group, the Newhouse News/Richmond Times-Dispatch reports.

Ronald Tenpas, a U.S. associate deputy attorney general, this month in testimony before the House Committee on Oversight and Government Reform, said that drug makers are required by law to provide Medicaid with the same discounts they offer to managed care health plans and hospital chains, but the companies have been concealing those prices.

Committee Chair Henry Waxman (D-Calif.) said evidence shows that Medicaid has been "repeatedly overcharged for essential medications" by drug makers that have "deliberately crafted business plans to avoid giving Medicaid the proper discounts."

There are 150 pending federal investigations that allege unlawful pricing and marketing practices related to drugs sold to Medicaid, Medicare and the Federal Employees Health Benefits Program.

According to James Moorman, president of Taxpayers Against Fraud, liability in the pending lawsuits could amount to tens of billions of dollars.

Over the past six years, federal and state governments have recovered $3.9 billion in civil damages and criminal penalties related to 16 cases in which pharmaceutical companies overcharged the government for cancer, asthma, cholesterol, allergy and seizure medications.

Moorman criticized the U.S. Department of Justice for not pursuing such cases more aggressively and said the Bush administration has not provided adequate resources to settle the cases.

Tenpas said DOJ is moving as quickly as it can to resolve cases and protect federal health care programs from fraud.

The Pharmaceutical Research and Manufacturers of America declined to comment on the allegations but in a statement said that "the growth in spending on prescription medicines is at its lowest level in years" (Cohen, Newhouse News/Richmond Times-Dispatch, 2/22).