Originally published September 7 2005
California sues 39 pharmaceutical companies
by Mike Adams, the Health Ranger, NaturalNews Editor
California is suing 39 drug companies for inflating drug prices and cheating the state's Medicaid program out of hundreds of millions of dollars.
California's attorney general said on Thursday the state has filed a lawsuit accusing 37 more pharmaceutical companies of bilking the state's Medicaid program of hundreds of millions of dollars by inflating drug prices.
Attorney General Bill Lockyer said he has added companies including Amgen Inc. and GlaxoSmithKline Plc to a 2003 complaint accusing Abbott Laboratories and Wyeth of hiding the true costs of their drugs so that payments from Medi-Cal would be artificially inflated.
"We're dragging these drug companies into the court of law because they're gouging the public on basic life necessities," Lockyer said during a press conference held here.
The action was prompted by a whistle-blower lawsuit filed by a small pharmacy, Ven-A-Care, alleging that drug manufacturers reported "average wholesale prices" to the government health insurance program that were much higher than the actual cost to the pharmacy.
California charges that the company-reported prices effectively created higher profits for pharmacies, doctors and clinics.
By defrauding the state into paying higher reimbursement rates, the drug makers created a financial incentive for drug dispensers to use their products, the lawsuit alleges.
A spokeswoman for Abbott, Elizabeth Hoff, said the company "has consistently complied with all laws and regulations and we intend to vigorously defend against this lawsuit."
Bristol-Myers is "in full compliance with the law, guidelines and contracts," company spokesman Brian Henry said.
Amgen was named in the complaint because of its 2002 acquisition of Immunex Corp., and the suit does not involve any drugs now sold by Amgen, company spokeswoman Mary Klem said.
Officials at Wyeth and Mylan Laboratories Inc. , another defendant, could not be immediately reached.
Steve Brozak, an analyst with WBB Securities, said the California probe could prompt the federal government to broaden and intensify its own ongoing probes into whether drugmakers are overcharging for drugs taken by Medicaid patients.
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