i don’t think you understand this case. It is not about “best price” or charges fromt he manufacturer to the state. Itis about setting artificial Avderage Wholesale Prices (which is a ficticious number) and then selling products at very low prices to pharmacies (via wholesalers). This provides large margins to pharmacies, making them very happy and encouraging them to push specific brands. Of course, since state Medicaid reimbursement to pharmacies was (is) based on AWP and not actual wholesale acquisition cost (WAC), in the state’s view, it ends up reimbursing the pharmacies at too high a rate. Currently, thereis a move afoot, through regulation, to change reimbursement such that it is based on Average Manufacturer Price (AMP); however the pharmacy (not pharmaceutical) industry is fighting it since it would lower their reimbursement.

Atlex

Yes, everyone has a different payor contract but it all has to be disclosed and the Medicaid price is set by law with a formula based on the lowest price ANYONE pays for a drug and a rebate match. It isn’t really truly rocket science. If you don’t disclose lower rates that people pay, and the AG finds out then you get tagged for Medicaid fraud — just the same as those individuals who bill Medicaid for fictious items. The difference is that before there wasn’t such interconnectivity and when pharma said this is the AWP - everyone took it as gospel. Now the government looks and in the case of state goes after money.

Everyone gets a different contract (government or otherwise). Do you (the payor) want to pay more for higher doses or a flat rate? How big of a rebate can you live with? Do you want a rebate that kicks in after a certain number of units more, or do you want a rebate from script 1. It’s complicated.

I’m not saying nothing illegal is ever done, and I’m sure sometimes it’s done intentionally. But even if you don’t think you’ve (you the company) done anything wrong, the risk that a jury will think so is so great you might want to settle rather than risk the unknown.

“The problem is that pharma treats the states like it does the FDA. Picking and choosing what it discloses.”

“Hack” or others - do you see the FDAAA, or any other proposed regulatory changes, making any difference in this regard? _Is_ there a regulatory “fix” short of a Stalinist-sized FDA?

There isn’t any grey about it. The problem is that pharma treats the states like it does the FDA. Picking and choosing what it discloses. These guys though don’t play by pharmas rules and don’t care who your lobbyist is, you don’t have enough investment in their individual states to matter, they pay for pharma; Overall, the states are hungry, need revenue and they don’t really have any hesitation about suing. It is really pretty black and white.

Whatever law(s) these companies supposedly broke *probably* has to do with marketing or billing - and not safety data. The regulations in this area are unbelievably grey, and companies simply don’t know if they will win. The people at the company might have known the law and behaved in a way they thought complied with the law, but you don’t know how the jury will rule. If the jury rules against you, then the company can lose their ability to deal with the government. If that happened to a pharma company for a long enough time and to a sufficient extent, they may as well close the doors. So in that way the states really have the companies by the *alls.

From the company’s perspective it’s settle or go to court and either 1) win and pay only legal feeds or 2) lose and pay legal fees + money + LOSE THE ABILITY TO CONTRACT WITH THE GOVERNMENT.

From Alabama’s perspective it’s settle or we’ll sue you. If you settle we get cash, if we sue you we risk getting nothing, but we know you risk oh so much more.

This seems like a problem to me.