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Wisconsin Attorney General Sues Drug 

Makers on Pricing


The Wall Street Journal

June 3, 2004


Wisconsin Attorney General Peg Lautenschlager filed a lawsuit Thursday against 20 major drug manufacturers across the nation for allegedly inflating prices, violating the state's wholesale pricing laws and driving up costs for healthcare programs for the poor and other drug buyers.

According to the lawsuit, filed in Dane County Circuit Court, the manufacturers "embarked on an unlawful scheme" at least as early as 1992 to distort the drug pricing system.

The suit seeks to force the manufacturers to stop the practice and set up a restitution program for citizens, private payers and state health programs. It also seeks forfeitures of up to $10,000 per violation if the court finds the violations were against senior citizens.

Coalition of Wisconsin Aging Groups Executive Director Tom Frazier said the allegations in the lawsuit have added to senior citizens' anger over high prescription drug prices.

"Seniors, I think, are outraged about it. The marketing, the deception, the Canadian stuff," Frazier said, referring to U.S. Food and Drug Administration warnings not to buy cheaper Canadian drugs because they may be unsafe.

"Now we're going to throw price gouging and illegal pricing on top of that. 

What are we going to find out next that they're doing to keep older people from getting the prescription medicine that they need?" asked Frazier.

Manufacturers named in the lawsuit include Pfizer Inc. (PFE), Johnson & Johnson, Inc. (JNJ) and Bayer AG (BAY).

Pfizer spokesman Bryant Haskins declined to comment, saying he hasn't seen the lawsuit. Bayer and Johnson & Johnson officials didn't immediately return messages from The Associated Press Thursday.

The lawsuit alleges the manufacturers inflated prices for their drugs, deeply discounted the published wholesale prices for some customers and kept the discounts secret, according to the lawsuit. The purpose was to increase the manufacturers' sales, profits and market shares.

The plan enabled drug providers in Wisconsin's Medicaid program to charge the state false prices and interfered with the state's ability to set reasonable reimbursement rates for the drugs, the lawsuit said.

"Wisconsin's Medicaid program has paid more for prescription drugs than it would have paid if defendants had published their true wholesale prices," the lawsuit said.

The Medicaid program provides medical benefits, including prescription drugs, to low income and disabled people. The program is jointly funded by the state and the federal government. It reimburses physicians and pharmacies for drugs and other services they provide.

The inflated prices also caused some Medicare participants to pay higher copay for their drugs, the lawsuit said.

Medicare is a federal insurance program that covers senior citizens and some disabled people. It covers some prescription drugs.

More than 700,000 Wisconsin residents are entitled to reimbursement under the section of Medicare that covers their medicines, the lawsuit said.

The attorneys general of 13 other states already have sued drug manufacturers for allegedly breaking wholesale pricing laws. Those suits are still pending.

 


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