Three pharmaceutical companies will have to pay at least $7.3 million to the state of Missouri after a St. Louis jury found they overcharged Medicaid for prescription drugs.
According to the St. Louis Post-Dispatch, the jury sided with the Missouri attorney general's office, which claimed the companies schemed to boost profits by artificially inflating their "average wholesale price" on three drugs for respiratory ailments.
Jurors returned to deliberations on punitive damages, which would have to be paid atop the $7.3 million in actual damages.
"This is a simple case of fraud by reporting false prices," Rex M. Burlison, chief of the Missouri attorney general's office in St. Louis told the jury. "Do I get indignant when I see stealing from the state Medicaid program? ... You betcha."
The companies, Warrick Pharmaceutical, Schering Corp. and Schering-Plough Corp., were "marketing the spread," Burlison said, encouraging pharmacies and other healthcare providers to buy their brands by creating a large difference between the average wholesale price and the actual cost.
The average wholesale price is a factor in how much Medicaid reimburses for drugs for the poor.
Mike Moore, an attorney representing the pharmaceutical companies, called the average wholesale price a "sticker price" from which both sides could negotiate. He said Missouri's own policies were responsible for any overpayment, and said state officials knew what the average wholesale prices were and never objected until the lawsuit.
"The state controls the Medicaid reimbursement system," Moore said. "There is no evidence that we hijacked the system."
Almost 20 other states have suits against these same pharmaceutical companies, making similar allegations. The companies won the only other case to get to trial so far, which was in West Virginia, according to officials.
Another company originally named in the suit, California-based Dey Inc., settled with the state.
Warrick and Schering are a subsidiary of New Jersey-based pharmaceutical company Schering-Plough, which specializes in generic drugs. The total net worth of the three companies exceeds $10 billion, Burlison said.