Attorney General Hardy Myers today joined the National Association of Medicaid Fraud Control Units in announcing that Aventis Pharmaceuticals, Inc. (Aventis) has agreed to pay $22.7 million to the United States, the District of Columbia, and 38 states to settle claims that it defrauded the states' Medicaid programs through its drug pricing and marketing practices.
"It is unfortunate that the jurisdictions are forced to sue these companies that insist on defrauding the Medicaid system," stated Myers. "We unfortunately see too many cases in which the price of drugs is falsely inflated. It is my hope these suits begin to deter the industry from continuing these unlawful practices."
A joint federal and state investigation revealed that Aventis caused false claims to be submitted to federally-funded health care programs by inflating the average wholesale price (AWP) of their drug, Anzemet, which is used in oncology and radiation treatment to prevent nausea and vomiting. The investigation arose from a federal whistleblower complaint alleging that Aventis' pricing and marketing scheme for Anzemet violated the Federal False Claims Act.
Investigators found that from September 1, 1997 through June 30, 2004, Aventis allegedly tried to increase the market share for Anzemet over competitor products through "marketing the spread". The "spread" is the difference between the amount healthcare providers (pharmacies, hospitals, clinics, etc.) actually pay a pharmaceutical company for a drug, and the amount the healthcare provider is reimbursed for the drug by the Medicaid Programs. Most programs, including the Oregon Medicaid Program, reimburse for drugs based on reported AWP. If AWP is artificially inflated by a manufacturer, or a drug is actually sold to providers at a price significantly below AWP, the resulting "spread" between what the provider paid and the Medicaid/Medicare reimbursement increases the providers' profits. In this case, it was alleged AWP for Anzemet was artificially inflated by Aventis and then used as a marketing tool by Aventis sales staff to persuade providers to purchase Anzemet over another product, thereby causing the Medicaid Program to overpay for the drug.
Based on its record of payments for Anzemet, the Oregon Medicaid Program was allotted $225,190 in restitution, penalties and interests from the settlement. The settlement only addresses Medicaid Program damages for costs paid for the injectable form of Anzemet. Under the terms of the settlement, Aventis entered into a Corporate Integrity Agreement to ensure its future compliance with price reporting requirements.
Stephanie Soden, (503) 378-6002
Jim Sellers, Department of Human Services, 503-945-5738 firstname.lastname@example.org