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Hatch Files Suit Against Pharmacia

June 18, 2002

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ST. PAUL, Minn. (AP) _ Attorney General Mike Hatch filed a lawsuit Tuesday against drug maker Pharmacia Corp., alleging price fraud on some of its chemotherapy drugs.

The lawsuit accuses Pharmacia of defrauding Medicare and Medicaid by grossly inflating the costs of some cancer drugs. The inflated costs resulted in overpayments by the state’s Medicaid program and inflated co-payments by Minnesota’s Medicare beneficiaries, the lawsuit alleges.

The attorney general estimated the damages in the Pharmacia case at close to $1 million.

Pharmacia Corp. makes drugs used for the treatment of breast cancer, ovarian cancer, testicular cancer and lymphoma. The company has annual sales of $13.8 billion.

Minnesota joins a handful of other states that have moved against the pharmaceutical industry through so-called AWP litigation, which refers to the average wholesale pricing system used by drug manufacturers.

According to the lawsuits and an ongoing congressional investigation, drug makers in some cases grossly inflate the average wholesale price quoted to entities such as Medicare and Medicaid, then offer doctors and other providers of the same drugs deep discounts to those list prices.

Hatch cited a January 2001 report by the Office of Inspector General at the U.S. Department of Health and Human Services saying the Medicare program paid more than $1.2 billion in excessive reimbursement costs because of misrepresentations by pharmaceutical companies of the average wholesale price.

A spokeswoman for Pharmacia, based in Peapack, N.J., said the company would have no comment until officials had seen the lawsuit.

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