The US government is the world’s largest purchaser of prescription
pharmaceutical drugs. Most of those purchases come in the form of reimbursements for Medicare, Medicaid and TRICARE claims made by patients in these programs.

Strict laws have been enacted to ensure that the government gets best
possible pricing.

For instance, pharmaceutical companies who participate in state Medicaid
programs have to rebate a portion of all monies spent by the states for
prescription participants in the state Medicaid programs.

How the Rebate Program Works

The rebate agreement between pharmaceutical companies and the US
Department of Health and Human Services (HSS) requires them to furnish
the government with average manufacturer price, baseline average
manufacturer price and its best price.

Based upon those numbers, HSS tells the states how much rebate the state
is entitled to from the pharmaceutical companies for each eligible drug.
That rebate is usually a percentage of the difference between the average
manufacturer price and its best price.

Medicaid and Medicare pharmaceutical pricing fraud problems

The HSS and other federal agencies are always on the lookout for contractor
fraud.

In the area of the Medicaid pharmaceutical reimbursement program, several
avenues exist for potential fraud.

Specifically, drug companies may try to affect either number in the
calculation: the average manufacturer price or the best price.

Here are some ways they may do that, each involving them in fraudulent
activity:

• If the manufacturer pays Managed Care Organization’s (“MCOs”), or specialty pharmacies (SP’s) or prescription Benefit Manager (PBM) or other entities kickbacks to have a drug product listed on the MCO’s formulary, or otherwise gives preferential treatment to the drug product to increase utilization.
• If the company enters into agreements with hospitals or other buyers for educational and/or research grants. In effect, these services tend to raise prices and thus lower the rebate required to be paid.
• Providing off invoice rebates or discounts, thus hiding the true price paid.

These types of activities and others like them that fraudulently portray prices of drugs are clear violations and can result in criminal prosecution if detected.

Report pharmaceutical pricing fraud/Medicare fraud here.

Do you have information about the government improperly billed for pharmaceuticals? Help stop government waste and abuse, and get rewarded for your efforts. Our attorneys have significant experience representing healthcare industry whisteblowers. Complete the secure form on this page or call 1-800-581-1790 for a free no obligation consultation with a lawyer.