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State Sues Makers of Generic Medicines

September 26, 2003|From Reuters

Massachusetts on Thursday sued 13 generic drug makers, accusing them of inflating the prices of medicines purchased by the state's Medicaid program by more than $50 million over several years.

The suit against the 13 companies, including Corona-based Watson Pharmaceuticals Inc., was filed in U.S. District Court in Boston by Massachusetts Atty. Gen. Thomas Reilly.

The Massachusetts Medicaid program, which provides medical insurance for low-income patients, spends more than $1 billion a year for prescription drug products, Reilly said.

The latest effort by a state to take on the pharmaceutical industry over high drug prices also accuses the 13 companies of fraudulent promotional, marketing and sales practices.

In separate statements, most of the defendants said they believed they were in full compliance with all state and federal Medicaid and Medicare rules and regulations.

The complaint outlines a scheme under which the companies used the difference between actual sales prices and inflated Medicaid reimbursement levels as a marketing incentive for customers. It said customers, such as pharmacies, would pocket the difference in exchange for increased market share for the generic drug makers.

The suit seeks monetary damages, an order to stop the defendants from engaging in the fraudulent practices cited in the complaint and reimbursement of investigative and legal costs.

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