Pennsylvania Attorney General Jerry Pappert sued 13 major pharmaceutical companies Wednesday, making the state the latest to accuse them of inflating drug prices in a scheme that cost the state and its citizens hundreds of millions of dollars. In a 42-page lawsuit, Pappert accuses the drug companies of participating in an "unfair and deceptive" marketing campaign and a conspiracy that gave improper incentives to medical providers to increase their market share. About a dozen other states have filed similar complaints. "This scheme cost our citizens and the commonwealth hundreds of millions of dollars in overcharges for prescription drugs," Pappert reportedly said at a news conference. "I am seeking to return those dollars to consumers and state programs, put a stop to these practices and thereby lower the cost of prescription drugs for all of us." He named as defendants AstraZeneca ( AZN), Bayer AG ( BAY), GlaxoSmithKline ( GSK), Pfizer ( PFE), Amgen ( AMGN), Schering-Plough ( SGP), Bristol-Myers Squib ( BMY), Johnson & Johnson ( JNJ), Baxter International ( BAX), Aventis Pharmaceuticals ( AVE), Boehringer Ingelheim, TAP Pharmaceutical and Dey Inc. Pappert said he also reserves the right to take action against other companies. The suit alleges that drug companies established and promoted "spreads" between what drug companies actually charge for the drugs and what consumers and state programs are billed. Pappert argues that drug companies inflated the "average wholesale price" of prescription drugs to create a financial incentive for medical providers to use their drugs over a competitor's. Federal and state programs base their reimbursement rates on the AWP, which is the price charged to private insurers and consumers for drugs. Pappert said drug companies often sell drugs to medical providers at costs well below the AWP, creating a spread between what a medical provider pays for a drug and what the provider charges consumers and the government. In addition, the lawsuit charges that drug firms provided free goods and drug samples to medical providers, knowing that these providers would charge consumers and the state government the full price for the products.
Pappert alleges that drug companies offered other financial incentives, such as cash payments and free trips, to medical providers to promote the sale of their drugs at exorbitant prices. He also accuses the firms of engaging in efforts to cover up the illegal activity in order to maintain the scheme. "As attorney general, I am committed to doing everything I can to reduce the price of prescription drugs for the commonwealth and its citizens," Pappert said. Pappert asked the Commonwealth Court to issue a permanent injunction preventing the drug companies from committing the illegal conduct. He wants drug firms to reimburse Pennsylvania consumers and the commonwealth for overpayments and is seeking punitive damages. In addition, Pappert asked the court to award a $1,000 civil penalty for each offense against Pennsylvania consumers under 60 years old and $3,000 for each offense against consumers 60 years old and older, as required under the Unfair Trade Practices and Consumer Protection Law.