News in brief - Dec. 20, 2004

Lupron maker settles suit over drug's pricing - CMS seeks input on Rx benefit - Government alleges kickback, asks for more time in Medco case

Lupron maker settles suit over drug's pricing

TAP Pharmaceuticals Products has agreed to pay $150 million to settle a nationwide class-action lawsuit alleging that the company overcharged patients and health plans for its drug Lupron.

U.S. District Judge Richard G. Stearns gave preliminary approval to the proposed settlement agreement in late November. If the deal gets final approval, $55 million would go to certain designated health plans. Some $95 million would go to consumers and other health plans, and toward litigation costs and fees. Class members would be reimbursed based on how much Lupron they bought.

TAP Pharmaceuticals did not admit any wrongdoing. It earlier pleaded guilty to a criminal charge and paid the government $875 million.

The government accused TAP of giving physicians free Lupron samples that the government was then billed for when the drugs were given to Medicare patients.

CMS seeks input on Rx benefit

The Centers for Medicare & Medicaid Services is seeking public comments on its new guidance for the setup of the upcoming Medicare drug benefit. The draft guidance essentially is a layman's explanation of how prescription drug plans will implement drug formularies in anticipation of their 2006 launch and how they may control medication costs thereafter. CMS will revise the guidance after issuing final regulations on the benefit in January.

Physician groups have warned that tightly controlled formularies would lead to inadequate treatment options and bureaucratic headaches for doctors. The Medicare agency has posted the draft guidance online (www.cms.hhs.gov/pdps).

Government alleges kickback, asks for more time in Medco case

In exchange for a large managed care organization's business, pharmacy benefit manager Medco Health Solutions made the company a kickback offer greater than $200 million, the U.S. Attorney's Office in Philadelphia alleges in court documents filed in late November. The information was contained in a court filing in which the government asks for more time for discovery in its case against the nation's largest PBM.

In 2003, the government joined a whistle-blower action against Medco alleging that the company violated federal and state false claims acts in the way it provided mail-order prescription drugs to federal employees, retirees and their families.

The original government complaint charges that the company, among other things, created false records to show that physicians were contacted to discuss the proper drug, dosage or dispensing instructions when the contact was never made.

Medco disputes the government's allegations. Spokeswoman Soraya Balzac said the $200 million refers to Medco's purchase of a database. She added that the actual amount was less because the payment was part of a contract that did not run its full length. "Any payment was appropriate," she said.