SACRAMENTO — California's health program for the needy has paid hundreds of millions of dollars too much for pharmaceutical products because of fraudulent pricing practices by drug manufacturers, the state attorney general's office alleged Tuesday.
As a result, the California Medical Assistance Program reimbursed pharmacies and doctors up to 10 times more than it should have, said Collin Wong, chief of the attorney general's Med-Cal fraud bureau.
The program paid $14.55 for individual bags of saline solution or sugar water that cost $1.23.
It paid $55.59 for the antibiotic Vancomycin HCL, which cost $6.29, and $5.92 for 50 milliliters of sodium bicarbonate that cost providers 62 cents.
These examples involve products from Abbott Laboratories Inc., one of two companies that the attorney general sued earlier this year for allegedly defrauding Medi-Cal's $4-billion drug program.
But Wong said numerous other drug manufacturers are being investigated for allegedly overcharging Med-Cal, and the attorney general is sponsoring legislation to require all drug makers to submit accurate pricing information to the program.
"We want to end what arguably is the single largest cause of Medi-Cal fraud and abuse," he said.
Lockyer is scheduled to unveil a 10-point plan today for attacking Medi-Cal's billion-dollar fraud and abuse problem, which has ranged from scams involving a $7,000-a-month AIDS drug and adult diapers to laboratories and dental clinics that have charged for services they did not deliver.
In the last five years, Lockyer's office has filed 700 criminal cases against Medi-Cal providers and about 50 civil suits.
In January, Locker intervened in a nationwide whistle-blower suit initiated by a Florida pharmacy and filed an action in Los Angeles County Superior Court against Abbott and Wyeth Pharmaceuticals Inc. The case has been consolidated with other state suits and moved to federal court in Boston.
The attorney general is targeting one of the fastest growing segments of Medi-Cal's $30-billion budget. Prescription drug costs doubled from $1.55 billion in 1997 to $3.11 billion in 2001, and have kept climbing.
The suit alleges that the two drug makers grossly exaggerated the amount of money they were charging retailers, who are reimbursed by Medi-Cal for pharmaceutical products. This practice, the attorney general said, inflated the "spread" or difference between the cost of drugs to retailers and how much Medi-Cal pays them. The alleged motive was that the manufacturers of generic drugs wanted to gain a competitive advantage by winning favor with retailers by maximizing their profits.
