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Prescription Drug Manufacturers Underpaid Medicaid Rebates, Federal and State Whistleblower Complaint Alleges
Date:10/4/2011

PHILADELPHIA, Oct. 4, 2011 /PRNewswire-USNewswire/ -- According to a multi-count whistleblower action, alleging violations of federal and state False Claims Acts ("FCA"), more than a dozen top brand-name prescription drug manufacturers in the United States allegedly underpaid rebates to State Medicaid programs over the past seven years.  On October 3, 2011, the U.S. District Court for the Eastern District of Pennsylvania notified the parties that the whistleblower's Motion for Leave to File the Fourth Amended Complaint ("Complaint") was granted.  

The Complaint alleges that the defendant pharmaceutical manufacturers manipulated pricing data they report to the government and on which their rebate obligations on drugs they sell through State Medicaid programs are based.  The defendants, the Complaint alleges, understated their reported average manufacturer prices ("AMP"), on which their rebate obligations to the state Medicaid programs are calculated.  Improperly lowering AMP reduces rebates owed on high-priced pharmaceuticals, in turn, increasing the healthcare burden of the federal and state governments.

Beginning in 2004, the Complaint alleges, the defendant pharmaceutical manufacturers began entering into service fee agreements with drug wholesalers.  Drug manufacturers paid fees in exchange for certain services that the drug wholesalers provided.  With respect to the service fees they paid, the defendants improperly reduced the AMPs they reported to the government in one of two ways.  Several defendants treated the service fees they paid as discounts, improperly excluding them from and, in turn, lowering the AMPs they reported to the government.  Other defendants properly categorized the services fees as bona fide, excluding them from their AMP calculations.  Those defendants, however, offset certain price increases on their products against those service fees, failing to include those material price i
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SOURCE Berger & Montague, P.C.
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