Three major drug companies have been accused of illegally providing financial incentives to doctors and pharmacists to favor their products, a practice that costs consumers tens of millions a year.
The companies, Pharmacia, GlaxoSmithKline and Aventis, are accused of "consumer fraud, commercial bribery and making false statements concerning inflated wholesale prices to government-operated subsidized health plans."
Attorneys said the inflated drug prices cost consumers and the state government $50 million to $100 million a year.
The companies are accused of reporting inflated drug prices to governments, and charging lower prices to health care providers. The difference between the two amounts, after the government reimburses the higher costs, can be taken by the health care providers, enticing them to choose those drugs over other options.
The companies dispute the claim.
A representative from GlaxoSmithKline said the company does not control the price paid by doctors and pharmacies and the reimbursement rates from the government and that the company does not see the price differences as a way to entice doctors to favor their drugs.
Associated Press February 13, 2003
No major surprise here except to find out that some state governments are starting to hold the drug companies responsible for the illegal methods that drain the taxpayers of their hard earned money.
As I said over three years ago:
It is unfortunate that most physicians have no clue that the drug companies are spending (on average) $10,000 to influence their behavior. They, of course, do not receive a check, but the perks are quite significant.
They also don't realize that they actually lose that much income and more if they factor the time they lose by sitting with the drug company reps and going to their "free" meals and lectures. They are also clueless on what a fiduciary responsibility is, that they need to carefully analyze the costs involved in recommending expensive drugs.
Clearly drugs are sometimes appropriate and can save someone's life. But most of the time they are unnecessary, cause harm and cause the patient to divert much of their hard earned income to the drug companies that further perpetuates this indirect physician subsidy. One thing these drug companies are not is stupid. There is no way they would spend $10 billion a year to do this unless they received a significant return on their investment.
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