I wonder if these cases can be widened to formula pushing by hospitals
(via free samples sent in all discharge bags) and formula company direct
mailing of a substance the baby can become addicted to, to the detriment
of both the mother and baby's long term health via the early sabotage of
breastfeeding.

Doctors here are getting money.  Do any hospitals get money?  Or other
freebies for giving out formula?  Is it tied to other things?  

Any of our JD's care to comment?
Judy Ritchie

http://www.nytimes.com/2003/02/13/business/13DRUG.html?th

New York Will Sue 2 Big Drug Makers on Doctor Discount
By REED ABELSON and JONATHAN D. GLATER

New York plans to sue two major pharmaceutical companies today, accusing
them essentially of paying doctors and pharmacists to choose the
companies' drugs over competing medicines.
The state is joining six other states, including California and Texas,
in a growing legal attack on a longstanding practice that the states say
has cost state and federal governments and consumers hundreds of
millions of dollars in recent years.

The lawsuits contend that GlaxoSmithKline and Pharmacia, the two large
drug companies, gave discounts to doctors and pharmacies that bought
their drugs. Doctors often buy and dispense injectable drugs like
chemotherapy medicines. Pharmacies buy drugs in bulk to fill
prescriptions, and sometimes recommend particular drugs to doctors. 
The discounts work this way. The drug companies establish a price for
the drug that the government and insurance companies use to determine
how much to reimburse the doctors and pharmacies for the drugs they buy.
The companies then allow the doctors and pharmacies to buy their drugs
at much lower prices than the ones reported to the government. The
doctors and pharmacies then pocket the difference. 
The lawsuits argue that the drug companies, doctors and pharmacists all
profit from this arrangement, at the expense of the taxpayer and the
patient, who has a higher co-payment.
The lawsuits are expected to be filed this morning in state court in
Albany by Attorney General Eliot Spitzer, who is holding a news
conference to announce New York's action. A third drug maker, Aventis,
has been notified that it may also be sued.
Some cancer doctors have come under fire from members of Congress and
private insurers for profiting from providing chemotherapy drugs to
their patients, but the states are now taking direct aim at the overall
pricing practices of some of the nation's largest pharmaceutical
companies.
Regulators say it is easier to pursue the big drug makers for setting
the high prices, known as average wholesale prices, than it is to
investigate numerous individual doctors.
"What we're trying to do is focus on the entire practice, rather than a
particular drug from a particular company," Mr. Spitzer said in an
interview on Tuesday.
"What underlies this is a larger failure of the marketplace to properly
price drugs," he added.
As an example of the problem, Mr. Spitzer cited Adriamycin, a
chemotherapy drug made by Pharmacia. According to his staff, a doctor
may pay as little as $7.40 for 10 milligrams of the drug after the
discounts from the drug maker. But Medicare would reimburse the doctor
$34.42, based on Pharmacia's average wholesale price, and a Medicare
patient in New York would make a co-payment of $8.60. The doctor would
pocket $35.62, the difference between the amount paid for the drug and
the payments received from the patient and from Medicare.
Many of the companies and lawyers who defend pharmaceutical companies
argue that their pricing practices are legal, and say that attorneys
general are overreaching in their lawsuits. Any changes to the Medicare
and Medicaid reimbursement system, they say, should be made by Congress,
which has so far chosen not to act. 
"The question from the standpoint of the policy makers is whether this
is the kind of promotion that they want to, as a policy matter, stop,"
said James M. Spears, a lawyer with Ropes & Gray in Washington. "That's
a question for Congress to answer."
But the state suits pose a worsening problem for pharmaceutical
companies as regulators examine health care costs amid a nationwide
squeeze on state budgets. Several states, including California, Texas,
Minnesota and Nevada, have filed suits against numerous drug makers in
the last three years over their prices, and they say they are prepared
to expand their activities as they gather more evidence.
In California, for example, the attorney general expects to file new
suits in addition to one filed there last month against Abbott
Laboratories and Wyeth.
More states are contemplating lawsuits of their own, and state attorneys
general have formed a working group to share information and discuss
legal strategies. Private lawyers, many of them veterans of the tobacco
class-action litigation, have also joined the fray.
Attorneys general are trying to use litigation to force companies to
change their practices, not just to win damages, said Jennifer Arlen, a
law professor at New York University.
"They're filing cases where they know full well that it's not clear that
they can win if they go to trial," she said. "But because they're not
seeking damages in many of these situations — they're seeking structured
settlements — they're often getting a big bang for the buck by filing
their case."
Although the states are sharing information, they have filed separate
lawsuits rather than a single, unified suit, and they are using
different laws and pursuing different legal strategies. Several drug
companies are battling to have the lawsuits consolidated in federal
court in Boston. 

While the states are suing on behalf of their individual Medicaid
programs, which pay for drugs for the poor, some are also suing on
behalf of state residents covered under the federal Medicare program.
Medicare does not pay for most drugs, but does cover part of the cost of
certain kinds of medicines, like chemotherapy drugs administered in a
doctor's office. Patients are responsible for paying 20 percent of the
bill.
"They're harmed much more than the states," said Mike Hatch, the
attorney general for Minnesota, which sued Pharmacia last year.
Regulators are also concerned that cancer doctors may have a financial
incentive to recommend inappropriate or unnecessary chemotherapy because
they are able to profit from prescribing particular drugs. 
While New York is focusing on Pharmacia and GlaxoSmithKline as makers of
anti-nausea drugs, the lawsuits include all of the drugs they make.
(Aventis also makes anti-nausea drugs.) Medicaid is significantly
overpaying for many drugs, Mr. Spitzer said, although it is unclear
exactly how large those overpayments may be. "I sense there is waste
everywhere," he said.
The New York suits charge Pharmacia and GlaxoSmithKline with consumer
fraud and making false statements to government health plans when they
establish the drug prices, as well as with commercial bribery for trying
to wield inappropriate influence on doctors' decisions. The suits take
advantage of a New York statute that makes it a crime to try to
interfere with the fiduciary relationship between a doctor and a
patient. 
Each drug company benefits if it can enlarge its share of the market by
inducing doctors to choose their drugs based on the difference, or
spread, between what doctors pay for the drug and the amount they are
reimbursed, Mr. Spitzer said. "They gain by marketing the spread." 
Pharmacia and GlaxoSmithKline both argue that Congress has chosen to
allow the current system of setting prices for drugs to continue.
Spokesmen for those companies and for Aventis said they had not seen the
suit to be filed today and could not comment on it. 
A spokeswoman for Aventis said yesterday that the company voluntarily
stopped reporting an average wholesale price in August 2001, but
declined to say how the government now sets reimbursement rates for its
drugs.
"We really have to wait until we see and then review any additional
allegations," she said.
But Mr. Spitzer defended his decision to pursue the litigation, despite
inaction by Congress and the government programs. "Regulatory lapses
elsewhere don't create a justification for the perpetuation of a system
that is broken," he said.
The escalating price of drugs is motivating many states to try to tackle
these practices. In California, prescription costs for the Medi-Cal
program, which provides health insurance to low-income residents,
doubled from 1997 to 2001, even as the number of patients declined by 15
percent.
"The public should be incensed that the pharmaceutical giants are
fleecing the Medicaid program," said Collin Wong, the director of the
state attorney general's bureau of Medi-Cal fraud and elder abuse. 
The Texas lawsuit, which was one of the first to be filed, has turned up
some evidence unfavorable to the pharmaceutical companies, said Jeff
Boyd, deputy attorney general for general litigation.
Some former drug company employees who were deposed have provided
evidence that manufacturers deliberately used the spread between the
government's reimbursement and the price paid by doctors to persuade
doctors to use their drugs. 
Mr. Boyd said he thought some drug companies might try to avoid taking
cases to a jury.
"We're hopeful that as some of these dominoes begin to fall, some of
these companies will see the writing on the wall and come forward and
start trying to negotiate a resolution," he said.

             ***********************************************

To temporarily stop your subscription: set lactnet nomail
To start it again: set lactnet mail (or digest)
To unsubscribe: unsubscribe lactnet
All commands go to [log in to unmask]

The LACTNET mailing list is powered by L-Soft's renowned
LISTSERV(R) list management software together with L-Soft's LSMTP(TM)
mailer for lightning fast mail delivery. For more information, go to:
http://www.lsoft.com/LISTSERV-powered.html