Whistle blower says drug industry cheated Medicaid
Settlements of cases involving prescription drug price manipulation in both the U.S. Medicaid and Medicare health programs provide “evidence of systemic, industry-wide problems that need to be addressed,” U.S. Senate Finance Committee Chairman Charles Grassley, R-Iowa, said Wednesday.
At the second of 2 days of hearings on fraud in the Medicaid program, the Senate Finance Committee heard testimony from both state and federal officials detailing the more than $2 billion in recoveries from drug price manipulation over the past 4 years.
In Texas, for example, testified Assistant Attorney General Patrick O’Connell, Medicaid health fraud officials concentrated on cases against drugmakers not because the office set out to target them, but because “whistle blowers brought us cases which showed significant fraud in amounts which dwarfed the cases against other providers.”
The panel also heard dramatic testimony from Beatrice Manning, a whistle-blower who helped bring a case resulting in a $342 million civil and criminal settlement with Schering-Plough for price manipulation of its blockbuster allergy drug Claritin.
Manning, now a seminary student, was “manager of opportunity identification” for a subsidiary of Schering that it used for what she called “an intricate scheme to cheat Medicaid out of hundreds of millions, of not billions, of dollars.” The scheme involved providing free or low-cost services to HMOs in exchange for the HMOs putting Claritin on their drug formularies. The actual price of the drug would appear higher, thus enabling the company to charge Medicaid more.
Manning, however, said that despite the settlement, she regrets that the case held no individual company officials accountable, and that while the settlement is one of the largest ever in a Medicaid fraud case, “to some extent $350 million plus legal expenses was the cost of doing business for Schering,” because before the patent expired Claritin made more than $2 billion a year for the firm.
The hearings come as the committee begins a formal search for ways to trim federal Medicaid spending by $10 billion over 5 years. While all senators expressed support for fraud-fighting efforts, other cuts should be pursued carefully, warned the panel’s top Democrat, Max Baucus of Montana.
Baucus cited a poll released today by the Kaiser Family Foundation that found surprisingly strong public support for Medicaid at both the state and federal levels. The governments share the costs of Medicaid. “Three out of four Americans said Medicaid is a very important government program,” said Baucus, ranking it behind only Social Security and Medicare.
Opposition to reduced state or federal spending on Medicaid was strong even among Republicans and those who said their own state budgets were in crisis, the poll of 1200 adults found. At the same time, Baucus said, “there’s not majority support for any of the proposals presented so far for reform.”
The poll has a margin of error of plus or minus three percentage points.
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