Minnesota Sues Two Drug Companies Over Price of Inhalants

Minnesota Attorney General Mike Hatch (D) on Aug. 27 announced that the state is suing California-based Dey and New Jersey-based Warrick Pharmaceuticals for "grossly inflating" the prices of their inhalant drugs and costing Minnesota and its senior residents "millions of dollars," the AP/Arizona Daily Star reports. The lawsuit, filed in state court in Hennepin County, Minn., alleges the two companies engaged in consumer fraud, Medicaid fraud, fraud on seniors and the disabled, false advertising and unjust enrichment (Mills, AP/Arizona Daily Star, 8/28). The lawsuit claims that Dey and Warrick devised a way to increase the average wholesale price -- used to determine reimbursements charged to Medicare, Medicaid and other prescription drug programs -- for four drugs, the St. Paul Pioneer Press reports. The drugs are albuterol sulfate, which is usually given to improve the breathing of people with asthma, emphysema and other lung ailments; cromolyn sodium, which is used to prevent or alleviate asthma attacks; acetylcysteine, which is used to help relieve congestion; and ipratropium bromide, a nasal spray that is sometimes used by asthmatics and allergy sufferers (Hanners, St. Paul Pioneer Press, 8/28). Hatch alleges that Dey and Warrick tried to boost sales by widening the gap between the AWP and the price they charged doctors and pharmacists, who could then pocket the difference, the AP/Star reports. Hatch estimated that 350,000 Minnesota residents use inhalants made by Dey, which is part of Germany-based Merck KGaA, and Warrick, part of New Jersey-based Schering-Plough (AP/Arizona Daily Star, 8/28).

Other Suits
The AWP inflation is "a horrible scheme, and it's one that's got to be stopped," Hatch said, adding that other drug companies might be added to the lawsuit later. Michael Vanselow, an assistant attorney general, said that Dey and Warrick "make [the AWP] numbers up." However, Bill O'Donnell, a spokesperson for Warrick, said that "any overcharges or abuses were the fault of the government, not Warrick," the Pioneer Press reports. "The point is, it has been well-known and widely reported since the 1960s that average wholesale price does not reflect actual prices. Contrary to what the suit is alleging, the company did not seek to take advantage of the average wholesale price system," he added. Similar suits against Dey and Warrick have been filed in Connecticut, Montana, Nevada, Texas and West Virginia, and the two companies also face a federal grand jury investigation over inflated average wholesale prices in Massachusetts (St. Paul Pioneer Press, 8/28).