Quote of note:
California joins a list of at least 10 other states who have filed similar lawsuits in an attempt to ratchet down spiraling health costs by seeking lower drug prices. In June 2004, Texas settled a suit filed in 2000 against three drug makers for $45 million.
...The case is being consolidated with those filed by other states in federal court in Boston, Massachusetts.
California accuses drug companies of inflating prices
Suit claims firms have overcharged by hundreds of millions of dollars
- Greg Lucas, Chronicle Sacramento Bureau
Thursday, August 25, 2005
(08-25) 15:48 PDT Sacramento (SF Chronicle) --
California sued 39 pharmaceutical companies Thursday for allegedly inflating their prices and causing the state’s health care program for the poor to potentially pay out hundreds of millions more than it should.
The lawsuit, filed by Attorney General Bill Lockyer on behalf of the state’s Medi-Cal program, claims drug makers manipulated prices to artificially increase the reimbursement rate paid to pharmacists.
“We’re going to drag these drug companies into courts of law because they’ve been gouging the public on basic life necessities,” Lockyer said at a press conference announcing the suit.
Drug companies who chose to comment denied the charges.
California joins a list of at least 10 other states who have filed similar lawsuits in an attempt to ratchet down spiraling health costs by seeking lower drug prices. In June 2004, Texas settled a suit filed in 2000 against three drug makers for $45 million.
Lockyer said each of the 39 drug companies in California’s lawsuit could be liable for as much as $30 million to $40 million.
The case is being consolidated with those filed by other states in federal court in Boston, Massachusetts.
At the core of the lawsuit is the claim that drug makers manipulate what is called the average wholesale price of a new drug, setting it higher than it should be to maximize profit.
As an example, Lockyer showed reporter a drug called Methotrexate, made by Roxane Laboratories and used in chemotherapy and the treatment of rheumatoid arthritis. Pharmacists purchased the drug for $2.82 but were reimbursed $31.83 from Medi-Cal — an 872 percent profit.
