California Attorney General Bill Lockyer sued 39 pharmaceutical companies, accusing them of defrauding the state’s Medi-Cal program of potentially hundreds of millions of dollars.
Lockyer claims that the pharmaceutical companies, including Abbott Laboratories, Bristol-Myers Squibb, Novartis AG, Schering-Plough, GlaxoSmithKline, and Amgen, defrauded the state’s Medi-Cal program, which provides healthcare to the poor, disabled, and elderly, for at least ten years. He claims that the companies charged Medi-Cal up to ten times the price charged to other organizations, such as private clinics and hospitals. The system works by reimbursing healthcare providers for the drugs they dispense to patients covered by the program.
Medi-Cal is California’s version of the US federal Medicare program, which provides medical insurance for the poor, jointly financed by federal and state governments. Medi-Cal reimburses $4 billion a year for drugs, out of a total budget of $34 billion.
Lockyer claims that each of the companies named in the lawsuit illegally profited by up to $40 million a year by providing false and misleading information about the prices of their drugs.