Drug companies dodge ban from Medicare, Medicaid

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> Sat, 9 Oct 2004 15:02:12 -0400

> Drug companies dodge ban

> from Medicare, Medicaid

>

>

> Drug companies dodge ban from Medicare, Medicaid

>

> By Julie Schmit, USA TODAY

>

>

http://www.usatoday.com/news/health/2004-08-15-pleas_x.htm

>

> The government has yet to use its power to bar major

> drug companies that

> commit fraud from doing business with federal

> programs such as Medicaid and

> Medicare.

>

> A 1996 law mandates exclusion from federal health

> care programs for those

> who plead guilty to, or are convicted of, felony

> health care fraud after

> Aug. 21, 1996. But since 2001, at least four major

> drug companies, including

> two recently, avoided that penalty under settlements

> with prosecutors.

>

> .In July, the government reached a $345 million

> settlement with

> Schering-Plough over charges that private insurers

> were charged much lower

> prices on Claritin than the government was. The

> guilty plea was entered by

> an inactive Schering-Plough sales subsidiary with no

> employees where the

> fraud occurred. It's excluded from federal programs,

> but the parent

> company's products are not.

>

> .In May, Pfizer's Warner-Lambert division agreed to

> $430 million in fines

> and pleaded guilty to illegally marketing the drug

> Neurontin " through at

> least August 20, 1996 " - one day shy of the law's

> trigger date for mandatory

> exclusion. Prosecutors alleged the misconduct

> occurred later, too.

>

> .TAP Pharmaceuticals in 2001 and Bayer in 2003

> pleaded guilty to illegal

> acts before August 1996, although prosecutors also

> alleged later misconduct.

> If the pleas had covered that, the companies " likely

> would " have been

> subject to exclusion, the Department of Health and

> Human Services says.

>

> " The settlements are structured very carefully to

> avoid mandatory

> exclusion, " says John Bentivoglio, a former Justice

> Department lawyer who

> represents health care companies.

>

> The argument is that 80 million poor and elderly

> clients in Medicaid and

> Medicare would suffer by losing needed drugs,

> especially those made by just

> one company.

>

> " We cannot exclude them, we're dependent on them, "

> says Timothy Jost, health

> law professor at Washington and Lee University. He

> says big fines might be a

> better way to punish wrongdoing.

>

> But prosecutors can unfairly threaten to use the

> penalty to win big

> settlements because exclusion from the huge federal

> programs " is a death

> sentence, " says attorney C. Boyden Gray, partner at

> Wilmer Cutler Pickering

> Hale and Dorr.

>

> The 2003 settlement of medical device maker Abbott

> Laboratories shows how

> creative settlements can be. Abbott, as did the

> other companies, denied the

> civil charges in its fraud case. But it agreed to a

> $600 million in fines

> and one of its units, CG Nutritionals, pleaded

> guilty to obstructing a

> federal probe. CG was excluded from federal

> programs. But the manufacturer

> of infant formula never did business with them.

>

> The exclusion law has largely been used against

> direct providers of health

> care, such as doctors and nurses, since its adoption

> in 1977. It was amended

> in 1996.

>

> The exclusion penalty might be harder to avoid as

> prosecutors dig into

> post-1996 conduct. " At some point, they're going to

> have to pull the trigger

> to show they'll do it, " says Patrick Burns of

> Taxpayers Against Fraud.

>

> Find this article at:

>

http://www.usatoday.com/news/health/2004-08-15-pleas_x.htm

>