A federal judge has ruled that three pharmaceutical companies artificially marked up their prices in order to defraud Medicare and encourage doctors to prescribe their drugs over those of competitors.
The decision came in a class-action lawsuit against AstraZeneca, Bristol-Meyers Squibb, Johnson & Johnson and Warwick Pharmaceuticals, a subsidiary of Schering-Plough Corp. U.S. District Judge Patti Saris ruled against AstraZeneca, Bristol-Meyers Squibb and Warwick, while clearing Johnson & Johnson of "egregious misconduct."
However, she described even Johnson & Johnson's actions as "troubling."
Saris agreed with the plaintiffs' complaint that the drug companies deliberately inflated their average wholesale prices in 2003, when those prices were still used to determine Medicare reimbursements. This created a gap between the prices Medicare was paying and the (lower) prices charged to doctors and pharmacies. This meant that doctors would actually be reimbursed more than they had paid for the drugs, creating a profit incentive for doctors to prescribe certain products.
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