A group of Alabama clinics filed a lawsuit last week alleging drug companies have overcharged public hospitals and clinics by as much as $500 million per year since 1992. But a trade association that represents facilities in a federal drug-discount program has distanced itself from the suit, saying it is premature and may hamper other efforts to combat overcharges.
Tuskegee-based Central Alabama Comprehensive Health, which operates about 10 clinics in Alabama, filed a lawsuit in U.S. District Court in Montgomery, Ala., against nine pharmaceutical companies. The lawsuit seeks to include all public hospitals and clinics that may have been overcharged, but at deadline no others had joined.
The lawsuit is based on a June report by HHS' inspector general's office that said many drugmakers appeared to be violating a 1992 law that created a drug discount program for facilities that provide indigent care.
"We are very distressed ... that this lawsuit was filed without our consultation," said Edith Marshall, counsel for the Public Hospital Pharmacy Coalition, which represents about 225 of the more than 250 hospitals and clinics that use the discount program nationally. The Alabama clinics don't belong to the coalition. Marshall said she wanted to speak with the law firm that filed the lawsuit and she would not rule out joining such a lawsuit.
The government report examined prices that hospitals and clinics paid under the discount program in September 2002, and investigators found that more than 97% of them were charged amounts above the legal limit. In total, the facilities were charged $41.1 million more than they should have been that month.
Steve Berman, Central Alabama's attorney and a managing partner with Hagens Berman, which regularly represents plaintiffs in class-action lawsuits, said his client had a strong case because HHS' investigations are "usually pretty good."
Marshall and the public hospital coalition's executive director, Ted Slafsky, both said the report revealed rampant overcharges, but it didn't spell out the cause. Nor did it specify which companies were to blame, or whether the overcharges were accidental or intentional. The report also suggested a need for greater resources for the program, under which six federal employees oversee the doling out of $300 billion, Slafsky said.
Marshall said the coalition has been negotiating with some of the drugmakers about refunds to hospitals and clinics in the program but declined to name the companies.
Bryant Haskins, a spokesman for Pfizer, one of the companies named in the lawsuit, said Pfizer officials were reviewing the complaint.
Anne Griffin, a spokeswoman for Eli Lilly and Co., another defendant, said her company was confident in all its billing practices.