New York state Attorney General Eliot Spitzer filed lawsuits against three major drugmakers on Thursday, accusing them of providing financial incentives to doctors and pharmacists to favor their products.
In lawsuits filed on Thursday in New York state courts, Spitzer accuses Pharmacia Corp., GlaxoSmithKline and Aventis of consumer fraud, commercial bribery and making false statements concerning wholesale prices, typically for cancer drugs.
In a statement, Spitzer says physicians who administer the drugs in their offices make money from the arrangement, and this remuneration may prompt them to choose the company's drug over a competing drug. But the lawsuit does not name physicians.
The three drugmakers told the Associated Press that their pricing practices are legal.
The way the arrangement works, Spitzer says, is that companies report an inflated price for the drugs to Medicare, Medicaid and other government-run health programs. Those programs then use that price to reimburse doctors and pharmacies for the drugs, even though these providers buy the drugs at a lower price.
Physicians then pocket the difference, Spitzer alleges.
Spitzer said the price spread can be as much as 76% for Pharmacia's Adriamycin RDF/PFS, an injectable drug used to treat various cancers including breast and ovarian cancer, between what government plans reimbursed physicians and the amount the company sold the product to physicians.
"We are seeking restitution for consumers and the state, and new reforms that will help maintain the integrity of the doctor-patient relationship, by making sure that medical decisions are based on sound clinical guidelines, not on whether a manufacturer's drug delivers higher compensation to a provider," Spitzer says.