Pharma 101 - Pharmaceutical Fraud

Archive for June, 2007

Federal Judge Rules Drug Companies Engaged in Drug Price Deception

In a class action lawsuit that claims drug companies unfairly adjusted prices of medication, the plaintiffs scored a major victory when Judge Saris found that defendants “unfairly and deceptively caused false AWPs to be published knowing that payers and the government did not understand the truth and the severity of the markups.”  The named defendants are AstraZeneca, Schering-Plough and Bristol-Myers Squib. 

In her opinion dated June 21, 2007, Judge Saris wrote that “Unscrupulously taking advantage of the flawed AWP system … by establishing secret mega-spreads far beyond the standard industry markup was unethical and oppressive.” She also wrote that such practices, “caused real injuries to the insurers and patients” who paid inflated prices for life-sustaining drugs. Such drug pricing fraud is part of a broad category of pharmaceutical fraud.

AWP is Average Wholesale Price, the measure by which drugs were generally paid for by healthcare payors in years past. Medicare now pays for drugs on an Average Sales Price basis, which is an actual price and less likely to be manipulated.   

To read more of the story look here. 

Clinical investigator indicted for fraud in pharmaceutical trials of blockbuster drug

NEW ORLEANS — Dr. Maria Carmen Palazzo was indicted by a federal grand jury on 55 counts of health care fraud and false documentation in connection with a clinical trial of Paxil in children and adolescents, U.S. Attorney Jim Letten said on Thursday.

One area of charges involves clinical trial fraud. According to the indictment, Palazzo, as a clinical investigator for SmithKline Beecham doing business as GlaxoSmithKline, fraudulently failed to maintain and prepare records required by the FDA for evaluation the drug’s safety and effectiveness in children and adolescents.

During approximately a five-year period, Palazzo also defrauded Medicare in connection with services she claimed to have rendered to patients in a Psychiatric Partial Hospitalization Program at Touro Infirmary , according to the indictment.

The indictment also charges that Palazzo defrauded Medicare by submitting fraudulent invoices to Touro for consulting and medical director services. The indictment says because of that Medicare paid Palazzo over $653,000 she was not entitled to receive. (Consulting and Medical director costs of hospitals are passed on to Medicare in part, under the cost report system).

See the full story here.