Abbott Laboratories Cuts Drug Prices Amid Reports of Overcharging

Pharmaceutical firm Abbott Laboratories has "quietly lowered" prices on a wide range of prescription drugs amid allegations by state and federal officials that the company overcharged the government for certain medications' wholesale prices, the Chicago Tribune reports. Abbott has "slashed" prices for "everything from intravenous solutions to painkillers to heart medicine," with many of the medications priced at only a "fraction" of what they cost two months ago. For example, a drug kit used by home health workers to clear clogged IVs previously cost $127 but is now priced at $2.39, while the price of a 20-milliliter dose of the cardiac drug Dobutamine has dropped from $54.11 to $9.26 in the past few weeks. The prices of "dozens" of other Abbott drugs, however, have remained the same or been lowered "only modestly." Abbott is one of more than 20 drug makers being investigated by the U.S. Justice Department for allegedly overstating the wholesale prices of drugs, used by the Medicare and Medicaid programs to set reimbursement rates. In an effort to boost sales, the companies then allegedly sold the drugs to doctors for much less, allowing physicians to generate a profit. Five states also are conducting separate investigations into the company's pricing practices, according to Abbott. The company would not comment on whether the price cuts were made in response to the investigations, but David Waterbury, chief of Medicaid fraud investigation for Washington state, said that the price cuts are a sign that Abbott is "bending to regulatory pressure." Abbott spokesperson Christy Beckmann disagreed, saying that the price changes are "routine." She said that the company "periodically and routinely evaluates pricing based on a number of factors, including competitor pricing [and] operation costs."

Will Others Follow?
The Tribune reports that Abbott's price cuts "bolster assertions by state and federal investigators that public health insurance programs have been grossly overpaying for many products," and many now wonder whether other drug makers will decrease their drug prices. Sarah Ross, an analyst with Edward Jones, said, "I think other drug companies are going to be taking a close look at their prices. But to this magnitude, I wouldn't count on it" (Japsen/Zajac, Chicago Tribune, 6/14).