Legal Matters

HHS Tightens Scrutiny of Compliance With Medicaid Drug Rebate Program Regulations (Part 4 of 6)

From Drug Benefit Trends®Posted 02/12/2004

By Diane Ung, JD; George Kenny, JD


Ongoing Manufacturer Investigations

In June 2003, the House Energy and Commerce Committee sent letters to nearly 2 dozen drug manufacturers, including Abbott Laboratories, Aventis Pharmaceuticals, Barr Laboratories, Bristol-Myers Squibb (BMS), Eli Lilly and Company, Johnson & Johnson, and Schering-Plough Corp, and 3 drug wholesalers, initiating an expanded Medicaid fraud investigation into drug rebate programs.[10,11] The committee's inquiry builds upon earlier investigations into Medicare drug pricing fraud and follows recent and substantial settlements obtained from drug manufacturers in regard to alleged fraud involving the MDRP.[12,13] The focus of the inquiry includes a review of drug manufacturer and wholesaler pricing data, drug sales and utilization data, price and Medicaid program reimbursement spreads, and differences between drug acquisition costs and prices.

Drug manufacturers have responded to this stepped-up federal scrutiny. Recently, King Pharmaceuticals, the maker of Altace (used to treat hypertension), acknowledged that it underpaid Medicaid under the regulations of the MDRP.[14] King made adjustments in its corporate financial statements and contacted the OIG to resolve the matter. In July 2003, BMS said it was probing into its Medicaid rebates and pricing to ensure compliance with best price requirements under the MDRP.[15] Following that announcement, BMS received a subpoena from the US Department of Justice for documents relating to the internal investigation.[16]


Drug Benefit Trends 16(1):16-18, 2004. © 2004 Cliggott Publishing, Division of CMP Healthcare Media

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