Best Price and Inflated Drug Pricing Claims in Houston

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Federal law prescribes that the government receives the best price for drugs. Best Price is the lowest price the manufacturer sells a covered drug to any purchaser in the United States, inclusive of cash discounts, free goods, volume discounts and rebates. The Best Price provision ensures that the government is being provided the lowest price on drugs.

To do this, drug manufacturers must pay rebates to the states to insure that the Medicaid program is receiving the best price on covered drugs. Finding the mythical needle in a haystack is easier than discovering what the best price of a drug is. The current system literally puts the entire process, practically unmonitored, into the hands of the very people who abuse the system. The Medicaid drug rebate process is a system consisting of five key players.

The key players area:

• The manufacturer,
• The wholesaler,
• The pharmacy,
• The Centers for Medicaid and Medicare Services (CMS)
• And the state Medicaid agencies.

However, the system mainly relies upon a three-way interaction between manufacturers, the Centers for Medicaid and Medicare Services (CMS), and the state Medicaid agencies.

Understanding How the Best Price System Works

The process is a very circular system. The manufacturer provides the Best Price and Average Manufacturer Price (AMP) to CMS. CMS then calculates the unit rebate amount, and provides that information to the state Medicaid agency. The states then use the utilization data provided by the pharmacies, and the unit rebate amount, to calculate the rebate owed to them by the manufacturer. However, the entire system is based upon the manufacturer honestly conveying to CMS the correct Best Price and AMP. Any mistakes, intentional or unintentional, will cause an underpayment in rebate amounts.

Given the complex calculation issues, and the fact that manufacturers are given the most crucial role in the process, best price schemes are so common that it was the first health care area that Inspector Rehnquist addressed. This is the one of the most frequent type of health care fraud case, and has become a top priority for the Office of Inspector General (“OIG”), Department of Health and Human Services (DHHS), and other health care fraud enforcement agencies.

On April 28, 2003, the OIG released the final version of its Compliance Program Guidance for the Pharmaceutical Industry (“Guidance”). The Guidance reflects the government’s continuing concern about sales and marketing practices by pharmaceutical manufacturers. Two of the major risk areas addressed in the Guidance are the integrity of data used to establish or determine government reimbursement and kickbacks.

The Guidance asserts that a manufacturer may be liable under the False Claims Act if:

• (A) government reimbursement for a product depends partly on pricing information reported directly or indirectly; and
• (B) the manufacturer knowingly or recklessly failed to report such information completely and accurately.

Manufacturers’ reported prices should take into account discounts, rebates, free goods contingent on a purchase agreement, up-front payments, coupons, goods in kind, free or reduced-price services, grants, or other price concessions or similar benefits offered to purchasers. The Guidance stressed that accurate net prices must be calculated in bundled sales, stating “any discount . . . offered on purchases of multiple products should be fairly apportioned among the products.”

You Can Make a Difference in Curbing Healthcare Fraud

Both the federal and state government take best price fraud and other types of healthcare fraud very seriously. But fraud often happens without their knowledge, making it difficult to uncover and prosecute. This is why the government needs help from people like you who work directly with individuals committing the fraud. If you have knowledge of a pharmaceutical company violating best price policies, it is important that you step forward to help stop it. The government rewards whistleblowers by providing a portion of the damages awarded in a lawsuit to compensate for their efforts.

Regardless of how you found out about the best price practice occurring in your workplace, it is important that you immediately consult with an experienced Houston best price fraud attorney. Your efforts can stop fraud and save millions of dollars in taxpayer funds.

Contact our firm at (832) 384-9783 to get started!