Pharma Manufacturer in Medicaid Fraud Case Ordered to Pay Millions by Wisconsin Jury

Hidden schemes to defraud Medicare and state Medicaid programs of scarce taxpayer dollars are at the heart of many whistleblower cases under the federal and state False Claims Acts.

This morning, Wisconsin Attorney General J. B. Van Hollen announced that a Dane County, Wisconsin jury has just declared that a pharmaceutical manufacturer defrauded the Wisconsin Medicaid program by reporting grossly inflated and fraudulent prices.

Pfizer was on the receiving end of the health care fraud verdict, which may result in more than $153 million in damages based on alleged practices by Pharmacia (which Pfizer had acquired). The AG reportedly cited a 1993 internal memo in which a pharma employee wrote that “three decades of gaming the present reimbursement scheme has provided a lucrative avenue of profit.”

“We as taxpayers, we as consumers, are not going to put up with being ‘gamed’ by anyone – no matter how big, no matter how small,” Van Hollen said.

The case continues the trend of “Average Wholesale Price” litigation (AWP), alleging that drug manufacturers are defrauding state Medicaid programs by publishing false average wholesale prices for their products, in order to grossly overcharge these public programs for drugs. At least 27 states have sued pharmaceutical manufacturers over alleged AWP violations. Alabama has already obtained jury verdicts against three companies of approximately $330 million.

As an example, Wisconsin reportedly argued that Pharmacia listed the wholesale price of its anti-breast cancer drug Adriamycin at $241.36, when in fact it sold the drug to providers wholesale for as little as $33.43. Pharmacia then reportedly “marketed the spread” of $207.93 to oncology providers–a large profit margin.

As Wisconsin argued, the wider the “spread,” the more probable a doctor or pharmacy is to increase sales of the drug.

We congratulate the Wisconsin Attorney General’s Office on recovering these taxpayer funds.