The alleged fraud by Dey Inc. and Warrick Pharmaceuticals Corp. has cost Minnesota and its senior citizens, who pick up part of the drug costs, millions of dollars, Attorney General Mike Hatch said Wednesday, announcing the suit. Some of the fraud dates to the early 1990s, he said.
The drugs at issue, including often-prescribed albuterol sulfate, are widely used to treat asthma, chronic bronchitis, emphysema and other diseases. The two manufacturers make inhalants used by 350,000 Minnesotans, Hatch estimated.
Other drugs named in the lawsuit include cromolyn sodium, ipratropium bromide and acetylcysteine solution.
The complaint, filed in Hennepin County District Court in Minneapolis, alleges that Dey and Warrick inflated the average wholesale price of the drugs in their reports to the government. The average wholesale price is used to determine how much Medicare and Medicaid pay doctors and pharmacists for administering and dispensing the drugs. No regulatory body oversees the reporting process, Hatch said.
Dey and Warrick used the difference between the inflated average wholesale price they report and what they actually charged doctors and pharmacists - known as the "spread" - to induce pharmacists and doctors to buy drugs from them rather than their competitors, Hatch said.
The companies are charged with consumer fraud, Medicaid fraud, fraud on seniors and the disabled, false advertising and unjust enrichment.
Dey, part of the German-based company Merck KGaA, is based in Napa, Calif. Warrick, whose parent is Schering-Plough Corp., has its principle businesses in Reno, Nev., and Kenilworth, N.J.
Calls to the companies seeking comment weren't immediately returned.
Other states that have filed suits against Dey and Warrick for drug pricing fraud include Texas, West Virginia, Montana, Nevada and Connecticut.
By Karren Mills