[Ip-health] Baxter, Swine flu vaccine supplier, pays back millions for fraudulently overcharging

[Ira Glazer]

http://www.guardian.co.uk/world/2009/oct/11/swine-flu-vaccine-baxter

A company producing swine flu vaccine for Britain has paid millions of
pounds in out-of-court settlements after being accused of fraudulently
overcharging for medicines.

Baxter, the US pharmaceutical giant, reached at least seven huge
settlements over the past 12 months, some of them for millions of
dollars. The company had been accused of fraud amid allegations that
it had overpriced medicines by as much as 1,300%.

The disclosure comes days after Baxter's vaccine, Celvapan H1N1, was
given approval by the European Medicines Agency and will raise fears
about the growing costs of the swine flu pandemic. Vaccines are
expected to cost the government =A3155m over the next four years.

Baxter became involved in prolonged litigation after being accused of
fraudulently overcharging Medicaid, the US health programme that
provides a safety net for the poorest families. Executives from the
company paid out $2m to the Kentucky state government this year. Jack
Conway, the Kentucky attorney general, said: "All of this could have
been easily avoided if Baxter=85 had done what the law requires: report
truthful prices.

"Taxpayers are footing the bill for these inflated drug prices, and my
office is seeking to recover the money the Medicaid programme lost as
a result of this deception and overpayment."

Medicaid relies on published average wholesale prices (AWPs) to
calculate the cost of medicines which pharmaceutical companies then
provide at a reduced rate. But several US states have accused a series
of pharmaceutical companies of grossly overinflating the AWPs. Seven
other states have reached settlements with Baxter: Texas, Alabama,
California, Hawaii, Alaska, Illinois and Wisconsin.

In May, Baxter was one of six pharmaceutical manufacturers that agreed
to pay $89m to the state of Alabama. In February this year Baxter paid
out $1.1m to Wisconsin. Three years ago the company agreed to pay out
$8.5m to Texas.

Baxter was one of five companies that paid California state
authorities $22.5m following accusations of Medicaid fraud, and the
company also paid out $400,000 to Hawaii. In Alaska, Baxter agreed to
pay compensation to settle a court claim. The company is also facing
court action in Mississippi. Illinois has recovered $6.8m from Baxter,
according to reports.

Despite the scandal, Baxter was one of two companies awarded the
contract to produce 132 million doses of vaccine for Britain. The
other company, GlaxoSmithKline, received a "positive opinion" for its
drug, Pandemrix, last month. Britain is reported to have ordered
enough swine flu vaccine to give each person two doses. The growing
cost of the vaccines has prompted concerns from politicians, but the
Department of Health and the drug companies have declined to say
exactly how much each vaccine costs.

Norman Lamb, the Liberal Democrat health spokesman, wrote to the
National Audit Office in July asking whether the contract with GSK
represented value for money. The National Audit Office has replied and
is broadly happy with the deal, according to reports.

Sir Liam Donaldson, the government's chief medical officer, said that
while swine flu could still cause potentially fatal complications
Britain may have had a "lucky break" with a second wave of illness
being lower than expected.

A spokeswoman for Baxter said that similar settlements with US states
have been paid out by many other US drug companies and arose because
of the unusual purchasing system employed by the Medicare system.
"Baxter was in no way trying to defraud the system and has acted in a
responsible, lawful and transparent manner. We will continue to work
closely with the British authorities," she said.