Kirby McInerney | Kirby McInerney LLP Wins Affirmative Summary Judgment in Medicaid Fraud Case Against 11 Drug Manufacturers
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Kirby McInerney LLP Wins Affirmative Summary Judgment in Medicaid Fraud Case Against 11 Drug Manufacturers

01/27/2010
BOSTON, January 27, 2010 - The Honorable Patti Saris of the United States District Court for the District of Massachusetts granted the City of New York and New York Counties' motion for summary judgment against 11 pharmaceutical manufacturers in In Re: Pharmaceutical Industry Average Wholesale Price Litigation. The decision states that the defendants violated New York Social Services Law 145-b by knowingly reporting fictitious prices on which Medicaid reimbursements were based.

Plaintiffs’ motion focused specifically on nine drugs and the impact defendants’ false price reporting had on the establishment of the “Federal Upper Limit” or “FUL” for such drugs. The “FUL” is set by the Federal Centers for Medicare and Medicaid Services (“CMS”) to “take advantage of savings that are currently available in the marketplace for [generic] drugs.” During the period at issue in plaintiffs’ complaint, New York Medicaid reimbursed for generic drugs on the basis of a FUL when one was in place. The Court found that defendants made CMS’s and NY’s efforts to control and limit generic drug reimbursements “impossible” because defendants reported prices that were “crafted from thin air”. The Court noted that “plaintiffs expert had calculated spreads between the Defendants’ published Wholesale Acquisition Costs (‘WACs’) and actual acquisition costs as consistently above 50%, frequently above 100% and sometimes over 1000%, with spreads as high as 1841% for Barr, 1893% for Ivax, 33641% for Mylan, 13486% for Par, 1103% for Purepac, 59936% for Sandoz, 1224% for Schering-Warrick, 2955% for Teva, 5775% for Waston and an Average Wholesale Price (‘AWP’)-Average Manufacturer Price as high as 17421% for Wyeth.”

The Court held that plaintiffs “proved that Defendants, by submitting false AWPs and WACs that were used by CMS in setting FULs’ knowingly made false statements or representations on behalf of themselves or others to attempt to obtain payment from public fund”.

The City of New York and New York Counties’ lawsuit is before Judge Saris for pre-trial purposes and as part of a massive multi-district litigation. The City/Counties’ case will return to a United State District Court in New York for trial after the close of discovery.

The ruling also denied defendants’ motions for summary judgment against the City of New York and New York Counties on claims for common law fraud and violation of New York General Business Law 349.

The suit on behalf of the City and counties is being led by Joanne M. Cicala, a partner at Kirby McInerney, LLP, a law firm with expertise in health care and consumer litigation. Kirby McInerney also represents the State of Iowa in similar claims.

Defendants affected by this ruling include: Barr Laboratories, Inc.; Dey, L.P. and Dey, Inc.; Ivax Pharmaceuticals, Inc.; Mylan Pharmaceuticals, Inc., and UDL Laboratories, Inc.; Par Pharmaceuticals Companies, Inc.; Purepac Pharmaceutical Co.;; Sandoz, Inc.; Schering-Plough/Warrick Corporation; Teva Pharmaceutical USA, Inc.; Watson Pharmaceuticals, Inc./Watson Pharma, Inc.; and Wyeth. This represents a sub-set of all defendants named in the City of New York and New York Counties' suit, as well as the State of Iowa suit.

For further information concerning the lawsuit or the decision, please contact please contact Joanne Cicala at 512.858.1800 or jcicala@kmllp.com.