[Ip-health] TAP PHARMACEUTICALS: To Pay Record Fine Over Drug Pricing]

[James Love]

From rxpolicy:

-------- Original Message --------
Subject: [RxPolicy] TAP PHARMACEUTICALS: To Pay Record Fine Over Drug Pricing
Date: Tue, 29 May 2001 13:01:45 -0700 (PDT)

This was in National Journal's American Health Line today.

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TAP PHARMACEUTICALS: To Pay Record Fine Over Drug Pricing 
 
      TAP Pharmaceutical Products will likely pay a fine of more than $840
million to settle federal allegations that it inflated the price of its
"top-selling" prostate cancer drug Lupron Depot, the Boston Globe reports.
Federal prosecutors allege that TAP "artificially inflated" the official
average wholesale price -- the price used as a guideline for setting
Medicare and Medicaid reimbursement rates -- as a means to "increase sales
and profits." TAP allegedly would then sell Lupron to physicians for about
$100 to $150 less per one-month dose and then "encourage" doctors to bill
the government and other insurers for the higher amount. Investigators say
TAP was "boldly using [this scheme] as a selling point," and physicians
usually made about 25% profit on the total bill. TAP also allegedly offered
doctors as much as $70,000 in free drug samples and told them to "bill
insurers as if they had purchased it," even though billing for free samples
is a violation of federal law. Court documents reveal that some doctors
pocketed as much as $400 to $550 per sample. TAP also was charged with
offering an "unnamed" Massachusetts managed care company $65,000 "in an
attempt to get it to switch from using a competing drug." Medicare
beneficiaries taking Lupron often paid more than $1,000 in co-payments per
year for the drug, and some patients have filed a separate class-action
lawsuit against TAP alleging that they were "overcharged by millions of
dollars." Over the past 10 years, Medicare has paid "billions" of dollars
for Lupron, and some government investigators believe the program paid "at
least $100 million a year more than it should have" for the drug. "It's a
ripoff of Medicare and the patients who paid their 20% co-payments," Jeffrey
Kodroff, lead attorney for the class-action suit, said. Meanwhile, several
states are investigating whether Medicaid was "bilked" as well. Kim Modory,
a TAP spokesperson, declined to comment on the class-action suit or the
company's marketing practices but said that the company "conducts its
business ethically" (Dembner, Boston Globe, 5/28). Since its approval by the
FDA in 1985, Lupron sales have "risen steadily," totalling more than $800
million in 2000 (Hale, Los Angeles Times, 5/29). A settlement in the federal
case is likely to be announced within the next few weeks.