A NYC Defense Attorney Explains Inflated Pricing Fraud
Manufacturers who wish their drugs to be covered by Medicaid must enter into agreements not to charge Medicaid more than they charge other purchasers to buy medications. To ensure Medicaid does not pay a higher price, drug manufacturers must submit two different numbers: the best price paid by anyone in the marketplace (after taking all discounts into account) and the average market price (AMP). Sometimes, however, manufacturers are accused of engaging in inflated pricing fraud.
When an accusation of inflated pricing fraud is made, drug companies and others involved in the fraud scheme can face criminal prosecution and civil legal actions. There is the potential for imprisonment, and for multi-million dollar fines, penalties, and recoveries. Defendants need to be aggressive and assertive in understanding their rights and in defending themselves vigorously against accusations of inflated pricing fraud. Bukh Law Firm, PLLC is a New York City criminal defense firm with experience handling complex cases related to best price rule fraud and inflated pricing fraud. Call today to speak with a NY criminal attorney who can provide you with advice throughout the process of resolving your case.
What is Inflated Pricing Fraud?
Inflated pricing fraud involves making false representations regarding the average wholesale price a drug is sold for. The goal is to provide an incentive for health care providers to purchase a particular drug.
Prior to 2005, Medicaid and Medicare Part B set prices for prescription drugs based on average wholesale prices. This calculation is no longer used by the federal government, but is still used by many state Medicaid programs. When a manufacturer reports the Average Wholesale Price to Medicaid that is higher than what is is actually charging pharmacies and care providers, Medicaid will pay a higher amount of reimbursement to doctors or pharmacies based on this inflated price. This, in turn, means the doctor or pharmacist can make a major profit from inflated pricing fraud.
Because inflating the AWP can result in care providers receiving a significant financial incentive for prescribing or distributing a particular drug, this inflation may be considered a type of illegal kickback in violation of the Federal Anti-Kickback Statute.
Penalties for Inflated Pricing Fraud
Penalties for inflated pricing fraud can be significant. Defendants can face criminal penalties for various types of pharmaceutical fraud crimes, including for kickback fraud schemes. Civil actions are also very common. Claims can be made by whistleblowers under the False Claims Act, and defendants can be required to pay restitution and triple damages along with other fines and penalties.
Drug companies may also pay millions of dollars to settle allegations made against them by state officials. In 2012, for example, Activas paid $118.6 million for causing the U.S. government, the New York State government, and three other state governments to pay more than necessary for medications. Activas caused these excess payouts by submitting “falsely reported inflated prices of drugs,” with knowledge that the government would use the reports to set elevated Medicaid reimbursement rates. The settlement followed one earlier that Bloomberg reported involved paying $84 million to settle claims of similar wrongdoing with the state of Texas.
How a NY Criminal Lawyer Can Help
Bukh Law Firm, PLLC provides legal representation to clients accused of kickback fraud scams, and all types of pharmaceutical fraud including fraud involving inflated drug pricing. Our experienced legal team understands Medicaid rules on the state and federal level and works hard to provide aggressive legal advocacy to help drug companies, their employees, and other defendants who are facing the potential threat of criminal and civil actions. We aim to help you negotiate a settlement, fight conviction, or otherwise negotiate a defense strategy that lets you minimize or avoid consequences of allegedly inflating drug prices. Give us a call today to schedule a consultation with a NY criminal lawyer and to learn more about the legal services and assistance we can offer.