If you’re accused of inflating price, that can be a serious problem. Manufacturers who want their drug to be covered by medicaid have to enter into an agreement not to charge Medicaid more than what they charge other purchasers to buy medication. In order to ensure medicaid does not pay a higher price, manufacturers submit two different prices: the best price paid by anyone in the market place after discounts, and the average market price. Sometimes, however – manufacturers are accused of engaging in an inflated pricing scheme.
When an accusation of price fraud is made, drug companies and others involved in the scheme – can face criminal and civil legal action. You can be imprisoned, and face multi million dollar fines, penalties, and more. If you’re facing these charges, you must be aggressive and assertive. Raiser & Kenniff, PC, is a premier NYC criminal defense law firm who has experienced handling tough and complex price fraud and inflated pricing fraud cases. Call today, to speak to a NYC criminal attorney who can take you through the case.
Inflated pricing fraud involves making false representations regarding the average wholesale price of the drug. The goal of it, is to make health care providers pruchase a specific drug. Prior to 2005, Medicaid and Medicare Part B – set prices for prescription drugs based on the average wholesale price. This is not longer used by the federal government – but is still used by many state Medicaid programs. When a manfacturer reports an average wholesale price to medicaid which is higher than what it’s charging pharmacies and care providers – medicaid then pays a higher amount for reimbursement to doctors and pharmacies – based on this higher inflated price. This means, that the doctor or pharmacist profits from the inflated pricing.
By inflating the AWP, this results in primary care providers receiving huge financial incentives for prescribing a specific drug. This inflation can be considered a type of illegal kickback – which violates the Federal Anti-Kickback statute.
Penalties for inflated pricing fraud can be huge. Defendants can face criminal penalties and civil actions as well. Claims can be made by whistleblowers under the False Claims Act. Other defendants can be required to pay restitution and triple damages, along with other fines. Often, drug companies pay millions of dollars to settle allegations.
Types of Schemes
Off-Label Marketing of Drugs: Before any drug can be used in the USA, it must be approved by the FDA. Pharmaceutical companies that engage in illegal off-label marketing, or promotion, of their drugs can be fined.
Illegal Kickbacks: One common scheme for pharmaceutical companies is to provide payments + financial incentives to hospitals and physicians. This kickback induces them to prescribe the companies drug to payments. Examples of payments and financial incentives include: bonus payments, free vacations, lavish dinners, tickets, gifts, payments for serving on boards, phony drug trials, research funding, grants, etc.
Inflating Pharmaceutical Price
Medicare and many State Medicaid programs determine the price paid for drugs based on an Average Wholesale Price for that drug. The AWP is determined by information provided by pharmaceutical manufacturers. One common type of fraud is for manufacturers to inflate the AWP and use that inflated cost to provide a financial inducement for pharmacists + physicians to prescribe the drugs.