CVS, America’s largest pharmacy chain, recently agreed to a $36.7 million settlement over charges that they defrauded taxpayers by overcharging Medicaid for prescription drugs. The federal and state investigation of CVS began in 2003 when Bernard Lisitza, an Illinois pharmacist, alerted authorities to CVS’s practice of overcharging Medicaid to fill prescriptions for ranitidine, the generic form of the popular drug Zantac®.

Mr. Lisitza, who will collect over $4.3 Million as his legal reward portion of the settlement, delivered evidence to the government that CVS was fraudulently switching prescriptions from the price-capped and less expensive tablet form of ranitidine to the more expensive capsule form in order to charge the government a higher price.

According to the government complaint, the illegal switch caused the federal government to pay CVS more than four times what it would have paid for the tablets. Capsules and tablets are considered different drugs and state pharmacy laws often prohibit the substitution of capsules for tablets. Because ranitidine capsules are so rarely prescribed, the federal government had not set a price ceiling as they had for tablets.

The case alleged that in switching the prescriptions, CVS had violated federal and state False Claims Acts which prohibit submitting fraudulent claims to the federal government. Companies that violate the False Claims Act may be found liable for damages up to three times the amount of the fraud, and $5,500 to $11,000 per false claim. The False Claims Act allows the whistleblower, known as the “relator,” to awards of 15%-20% of the government’s recovery in a settlement or lawsuit.

Pharmacists like Mr. Lisitza are in a unique position to uncover fraud and have played a critical role in helping state and federal governments recover tens of millions of dollars in false and fraudulent charges.

If you are seeing fraud on the government, contact us by calling 800.377.1812 for strictly confidential advice from experienced counsel, with no fee obligation.

H. Dean Steinke, a former sales manager who brought fraudulent sales practices by the drug maker Merck to light will be awarded $68 million dollars for his role as a whistleblower in the medical-care fraud case. This settlement is the largest of its kind under the federal False Claims Act. When asked by The Washington Post about his motivation for seeing the case through, Steinke replied:

“Sometimes you just get so frustrated about things that are wrong. These are the things that drive you, and you’re not going to stop until things are resolved.”

The case was in response to deceptive sales practices by Merck that flooded hospitals with the drugs Vioxx, Zocor, and Pepcid at heavily discounted prices in exchange for prescribing the medications for as many as three-quarters of eligible patients or being placed on a list of preferred medications. Many patients that rely on Medicaid were initially given prescriptions by hospitals at the cut-rate prices, only to have Medicaid foot the ongoing prescription cost at full price. This practice allowed Merck to gain advantage over its competitors making generic versions of the drugs in question. The practice also was in direct contradiction of the law that requires that pricing for the government be no more than for other customers.

The practice of gouging Medicaid for prescriptions which were written by doctors at hospitals given discounted pricing has been often called in to question recently. Many believe that dozens of drug companies may be guilty of this type of fraud. This case confirms that there are brave whistleblowers that are willing to take a stand and stop the taxpayer waste by drug companies.

If you are seeing Medicaid or other fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.

The news out of Alabama marks the second major decision in a Medicaid fraud case this month.

from the Associated Press:
MONTGOMERY, Alabama – A state-court jury awarded Alabama $215 million in its Medicaid drug-price-fraud suit against an AstraZeneca PLC unit.

The state had claimed the unit, AstraZeneca Pharmaceuticals LP, made Alabama’s Medicaid system pay too much for drugs prescribed to its patients by inflating prices. The firm said it had obtained for the state the best price it could for its drugs.

The circuit-court jury said the subsidiary must pay $40 million in compensatory damages and $175 million in punitive damages.

This type of Medicaid and Medicare fraud has been prevalent in recent years. Without the help of courageous whistleblowers, this fraud against the government would go on without consequence. If you are seeing fraud on the government, contact us via email or call (800) 377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.