PPSV Plays Important Role in Nation's Largest Medicaid Fraud Settlement
April 2003
In the largest Medicaid fraud settlement in US history, two pharmaceutical companies agreed April 16 to pay a combined total of $344 million to settle allegations that it illegally repackaged drugs and sold them at prices lower than the prices paid by the federal government and state Medicaid programs. The settlement is significant because it will, for the first time, have a direct benefit for the providers and patients participating in the Public Health Service's 340B drug discount program. Powers Pyles Sutter & Verville, counsel to the Public Hospital Pharmacy Coalition, played a key role in ensuring that the 340B providers and programs were included in the settlement.
According to the federal government, Bayer Corp. and GlaxoSmithKline (GSK) engaged in a "lick and stick" scheme, under which they sold privately labeled drugs to Kaiser Permanente at deeply discounted prices and hid the arrangement from the government, enabling the companies to avoid an obligation to pay millions of dollars in additional rebates to Medicaid and discounts to the 340B program. As stated in the government's press release, "today's settlements are the first national resolutions to recoup losses to the PHS program……It will ensure that PHS programs will be repaid in full the monies they lost."
The Bayer drugs covered in the settlement include the antibiotic Cipro, and the blood pressure drug Adalat. The GSK drugs include the allergy spray Flonase and antidepressant Paxil. The government has accepted the Coalition's recommendation that the manufacturers should be required to send refunds in the form of a check to the entities that were overcharged as opposed to a credit or other means of repayment According to the settlement, Bayer is required to pay the PHS entities that purchased the drugs in question no less than $9,482,620. GSK is required to pay no less than $2,558,371. Within 10 days of sending reimbursements to covered entities, the companies are required to submit a report to the HHS Office of Inspector General (IG) to determine whether the companies correctly calculated the overcharges and fully reimbursed each PHS entity. If the IG determines that the companies failed to include any PHS entity for which reimbursement is owed or underpaid the reimbursement, the IG will request that the companies pay the additional amount owed.
According to the US Attorney General's Office, the GSK settlement is final and the company has 60 days to issue checks to covered entities. The Bayer settlement won't be final until after a plea is taken and a sentence is imposed for the criminal portion of the case. If you have questions, please contact PPSV's Bill von Oehsen at william.vonoehsen@ppsv.com or Ted Slafsky or 202.466.6550.
You may also obtain additional information from the New York Times Article
