26 août, 2005 17:01
Associated Press
Update 4: Calif. Targets 39 Companies in Drug Suit
08.26.2005, 01:04 AM
California regulators named 39 new defendants Thursday in a lawsuit against U.S. pharmaceutical companies accused of inflating drug prices and costing state taxpayers hundreds of millions of dollars.
Among those named were drug giants Amgen Inc., Bristol-Myers Squibb Co., GlaxoSmithKline P.L.C., Novartis AG, Sandoz Inc., Mylan Laboratories Inc. and Schering-Plough Corp.
"We're going to drag these drug companies into courts of law because they've been gouging the public," California Attorney General Bill Lockyer said at a news conference. "We estimate each of the pharmaceutical companies could be liable for up to $30 to $40 million."
Representatives of Bristol-Myers Squibb, GlaxoSmithKline, Novartis and its subsidiary, Sandoz, said the firms followed the pricing guidelines under the law.
A spokeswoman for Kenilworth, N.J.-based Schering-Plough said the company had yet to see the state's complaint and declined to comment.
Amgen spokeswoman Mary Klem said the company was added to the suit because of claims filed against a subsidiary, Immunex Corp., before Amgen took it over.
Mylan did not immediately return calls seeking comment.
The state initially sued Abbott Laboratories Inc. and Wyeth Pharmaceuticals in 2003, accusing them of reporting false prices that California then used to set reimbursement rates for Medi-Cal, the state's version of the federal Medicaid program for disabled, elderly and low-income people.
Madison, N.J.-based Wyeth has since resolved the case, Lockyer said. Abbott, based in Abbott Park, Ill., was still listed as a defendant in the amended complaint filed Thursday. The company has previously denied any wrongdoing.
California's lawsuit is now combined with similar litigation from about a dozen other states that is pending in U.S. District Court in Boston. A final resolution could take years, Lockyer said.
An ongoing investigation led Lockyer to target the additional defendants.
In the new complaint, the state claims the drug companies inflated the average wholesale price of many drugs, creating vast spreads between the cost paid by health care providers and the reimbursement rates they received from Medi-Cal.
In one example cited in the suit, Medi-Cal paid $804.70 for a single bottle of the hypertension drug Atenolol. Providers such as doctors, clinics and pharmacists paid $33.85 for the same amount of the drug made by Canonsburg, Pa.-based Mylan Laboratories Inc., the suit said.
As a result, providers reimbursed by Medi-Cal for Atenolol pocketed $770.85, the state claimed.
The windfalls gave doctors, pharmacies and other providers an incentive to prescribe such drugs, which resulted in even more sales by drug makers, Lockyer said.
The attorney general did not rule out possible legal action against the providers.
Medi-Cal spends about $3.5 billion a year on drug costs, or 10 percent of its $34 billion annual budget, Lockyer said.
State laws require Medi-Cal to pay for drugs based on the average wholesale price. Lockyer conceded the state might have been able to get a better deal.
"I wish there had been more aggressive negotiation along the way," he said.
Shares of Amgen rose 84 cents to close at $79.58 on the Nasdaq Stock Market. Bristol-Myers Squibb fell 14 cents to $24.12 on the New York Stock Exchange, and Schering-Plough rose 3 cents to $20.75.
U.S. shares of London-based GlaxoSmithKline rose 52 cents to close at $47.82 on the NYSE, while those of Basel, Switzerland-based Novartis AG rose 12 cents to close at $48.31. Sandoz is a Princeton, N.J.-based unit of Novartis.
