Justice Dept. joins suit on drug pricing fraud

Physicians are rarely brought into such cases, but doctors should be wary of drug representatives touting high reimbursement gains, a lawyer warns.

By Amy Lynn Sorrel, AMNews staff. March 19, 2007.

The government is targeting only a pharmaceutical manufacturer in a recent lawsuit alleging that the company reported inflated prices for federally reimbursed drugs. But physicians who bill for the medications they purchase from drugmakers should take precautions to make sure they remain immune from liability in these types of cases, an expert warns.

The Justice Dept. in late January joined a whistle-blower lawsuit that accuses generic drug manufacturer Boehringer Ingelheim Pharmaceuticals Inc. and its affiliates of reporting to Medicare and Medicaid drug prices sometimes 1,000% more than the actual price its customers paid. The charges involve nine different medications, such as the cancer therapy azathioprine and hydromorphone, a pain treatment.

According to the complaint, Boehringer allegedly marketed the difference between the two prices to encourage customers to buy its medications and to boost profits.

The government and private insurers use the reported price, referred to as the "average wholesale price," as a benchmark to set federal reimbursement rates for doctors and others who buy the medications. Because of that, the government contends that, between 1996 and 2004, Boehringer knowingly caused its customers to submit more than $500 million in fraudulent claims to federal health care programs, in violation of the federal False Claims Act and anti-kickback statute.