Pfizer Unit Overcharged Wisconsin Medicaid, to pay Damages

Pharmacia, a company bought by Pfizer in 2003 was found by a jury to have illegally overcharged Wisconsin’s Medicaid program and could face $144 million in penalties the state’s attorney general said.

A Dane County jury in Madison, Wisconsin found that Pharmacia should pay $7 million to compensate the state for its monetary losses in defrauding the state’s Medicaid program and $2 million for violating consumer protection laws. Attorney General J. B. Van Hollen said a hearing to determine the amount of forfeitures hasn’t been scheduled as yet.

The jury also found Pharmacia to have violated Wisconsin’s Medicaid Fraud law more than 1.4 million times and Van Hollen said that under the state law the judge may award from a minimum of $100 to a maximum of $15,000 per violation, or as much as $21 billion.

“Rest assured we will be making a recommendation at the low end,” Van Hollen said. “It’s not my goal or my duty to put the death penalty” on any company or industry, he said. Pfizer can continue to participate in the state’s Medicaid program, Van Hollen said.

Even if the judge awards only $100 per violation, “that’s still $144 million, plus court costs and interest, for the people of Wisconsin,” he said.
Chris Loder, a Pfizer spokesman said, "We are weighing all our options on how best to respond to this verdict," he said, "and we are planning to appeal."

The case against Pfizer, the world’s largest drug maker which is based in New York, is the most recent one over the AWP system. Dozens of drug makers have been sued by at least 27 states over the practice and Alabama has already secured the jury verdicts worth about $330 million against three companies.

The accusations are that the companies post artificially inflated AWP prices and then “marketing the spread” to win business by encouraging pharmacies and doctors to seek reimbursement from state Medicaid programs at the full AWP price. The lawyers at the opening arguments of the case said that the wider the spread the more likely a doctor or pharmacy was to prescribe the company’s product.

Wisconsin alleged Pharmacia reported an AWP of $241.36 for a 20 milligram dose of Adriamycin, a cancer drug when it was selling at wholesale for as little as $33.43 and doctors were told to keep the difference and the state has asked for $9 million in compensatory damages.

In a statement Van Hollen said, “This verdict confirms that Pharmacia knew when it published false average wholesale prices for its drugs it would cause the state to grossly overpay for prescription drugs.”

“As we have maintained all along, the reimbursement rates paid to Wisconsin pharmacists were the result of deliberate decisions by the state of Wisconsin about how best to serve its Medicaid population,” said Loder.

Analysts said as Pharmacia is the first AWP claim to go to trial in Wisconsin from a lawsuit filed in 2004 by former Attorney General Peg Lautenschlager against the country's largest pharmaceutical companies and the outcome could influence the resolution of Wisconsin’s 33 other pending cases against drug makers.

"It sets the table for the other defendants out there," said Tom Storm, director of the Medicaid Fraud Control Unit at the state Department of Justice.

The federal government, which pays for part of the cost of Medicaid, stands to receive about 58% of the $7 million awarded to compensate the state for its monetary losses and could ask for part of the $2 million awarded for violations of the state's consumer protection laws.

"We are going to bat to make sure we protect taxpayer dollars," Attorney General J.B. Van Hollen said. "People will be brought to task."