Florida Attorney General Issues Six Subpoenas to Pharmaceutical Companies in Medicaid Fraud Investigation

Florida Attorney General Charlie Crist (R) on Tuesday issued subpoenas to six pharmaceutical companies that allegedly overcharged the state Medicaid program by $100 million for generic medications, Bloomberg/Orlando Sentinel reports. As part of the investigation, Crist requested internal company documents from Mylan Laboratories; Watson Pharmaceuticals; Ivax; Sandoz, the generic medication division of Novartis; Purepac Pharmaceutical, a division of Alpharma; and Teva Pharmaceutical Industries (Rovella, Bloomberg/Orlando Sentinel, 7/21). Crist requested information on prices for three dozen popular generic medications, which included treatments for hypertension, depression, high blood sugar, indigestion, mental illness, heart conditions and chronic pain. According to Mark Thomas, an assistant state attorney general involved with the case, Crist launched the investigation after a state review of prescription drug prices found "anomalies that bear looking at." The state Medicaid program will spend $2.35 billion this year on prescription drugs, an increase of 18.5% from 2003, the South Florida Sun-Sentinel reports (LaMendola, South Florida Sun-Sentinel, 7/21). According to Crist, the investigation will examine the prices that the companies have charged the state Medicaid program since 1994 (Hirth, Tallahassee Democrat, 7/21).

Evidence
The state review found evidence that pharmaceutical companies have charged pharmacies less than wholesale prices to make their products more competitive, according to Spencer Levine, director of the state Medicaid Fraud Control Unit. As a result, the pharmacies would have received additional profits because the state Medicaid program would have reimbursed them more than they paid for the medications, Levine said. Under federal law, pharmaceutical companies must charge Medicaid the lowest available prices for their products. "The taxpayers are paying that spread and increasing the market share of that manufacturer," Levine said. Crist said, "We're not saying anyone has done anything wrong. That's what we want to find out. (The investigation) makes sure the taxpayers of Florida are not getting ripped off" (South Florida Sun-Sentinel, 7/21). He added, "We need to get to the bottom of pharmaceutical pricing practices. If a violation has occurred, we will pursue and recoup these funds" (Bloomberg/Orlando Sentinel, 7/21).

Reaction
"We are cooperating fully with the request for documents and believe our marketing and pricing practices were compliant with all applicable laws and regulations," Ivax said in a statement (South Florida Sun-Sentinel, 7/21). Novartis spokesperson Sheldon Jones said that the company has violated no laws and would cooperate with the investigation. Alpharma spokesperson Kathleen Makrakis called the investigation "old news" but made no additional comments (Bloomberg/Orlando Sentinel, 7/21). Watson spokesperson Chris Eso said that the company expects to "comply fully" with the investigation (Tallahassee Democrat, 7/21).