By Scott Kagan, Esq
The drug manufacturer, Amgen, Inc. is once again paying a large settlement for their misdeeds. Amgen has agreed to pay $11 million to 36 states for fraudulent acts against State Medicaid programs. This settlement is part of a larger investigation into illegal marketing practices, which included promoting drugs for unapproved uses and illegal kickbacks.
This settlement was specifically entered by Amgen based on accusations of inflating pricing data for 6 of its prescription drugs (for kidney disease and cancer treatment). The inflation in turn, caused the settling states' Medicaid programs to overpay for them. The drug pricing data at issue concerns the "Average Wholesale Price" and "Wholesale Acquisition Cost." Many states (including NY) use "AWP" and "WAC" to set reimbursement rates for drugs dispensed to state Medicaid beneficiaries.
By inflating "AWP" and "WAC" pricing data, Amgen created an artificially inflated "spread" between the price at which Medicaid providers dispensed the named drugs, and the price at which the state reimbursed providers for them. If inflating this spread was not greedy enough, Amgen then marketed the spread to Medicaid providers in order to boost their own sales.
As part of the settlement, Amgen entered into a misdemeanor guilty plea in Federal Court for introducing a misbranded drug into interstate commerce. Including this payout, Amgen has now recompensed more than $647 million in damages related to allegations of fraud and deceit. Apparently for Amgen, the risk is worth the reward.