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Mississippi sues drug companies

The State of Mississippi has filed lawsuits alleging 86 pharmaceutical companies have defrauded the state’s Medicaid program of hundreds of millions of dollars through deceptive and fraudulent pricing and marketing of drugs.
The core of the issue appears to be that old pretense for pricing, Average Wholesale Pricing, or AWP. According to Insurance Journal,
“From fiscal 1999 to 2002, Mississippi’s prescription drug costs for its Medicaid beneficiaries shot up an average of 26 percent a year, (Attorney General Jim) Hood’s lawsuit said.
So the state first limited the number of prescriptions that its Medicaid enrollees could get each month to 7 from 10 — and then cut the number to 5, Hood added.
Mississippi charged the drug companies set so-called average wholesale prices artificially high. The state uses the prices to calculate reimbursement rates for physicians, pharmacies and other providers, the suit said.
“The Defendants have reinforced this tactic with other deceptive tactics such as covert discounts, kickbacks and rebates to providers, and the use of other devices,” the suit said.”
Mississippi has a well-deserved reputation as a litigation happy state but that is not to say Mr. Hood does not have a point about AWP, which has long been recognized as a meaningless basis for estimating drug pricing.
Firms involved in the dispute include Abbot Labs, Novartis, GlaxoSmithKline, and Pfizer.
What does this mean for you?
Watch closely, as Mississippi’s discovery process may uncover some interesting aspects of the whole drug pricing methodology.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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