Drug companies dodge ban from Medicare, Medicaid
By Julie Schmit, USA TODAY
The government has yet to use its power to bar major drug companies that commit fraud from doing business with federal programs such as Medicaid and Medicare.
A 1996 law mandates exclusion from federal health care programs for those who plead guilty to, or are convicted of, felony health care fraud after Aug. 21, 1996. But since 2001, at least four major drug companies, including two recently, avoided that penalty under settlements with prosecutors.
• In July, the government reached a $345 million settlement with Schering-Plough over charges that private insurers were charged much lower prices on Claritin than the government was. The guilty plea was entered by an inactive Schering-Plough sales subsidiary with no employees where the fraud occurred. It's excluded from federal programs, but the parent company's products are not.
• In May, Pfizer's Warner-Lambert division agreed to $430 million in fines and pleaded guilty to illegally marketing the drug Neurontin "through at least August 20, 1996" — one day shy of the law's trigger date for mandatory exclusion. Prosecutors alleged the misconduct occurred later, too.
• TAP Pharmaceuticals in 2001 and Bayer in 2003 pleaded guilty to illegal acts before August 1996, although prosecutors also alleged later misconduct. If the pleas had covered that, the companies "likely would" have been subject to exclusion, the Department of Health and Human Services says.
"The settlements are structured very carefully to avoid mandatory exclusion," says John Bentivoglio, a former Justice Department lawyer who represents health care companies.
