Merck, Lilly, J&J Pricing Practices Praised By AWP "Whistleblower"

Merck, Lilly, Johnson & Johnson and DuPont are examples of manufacturers who do not market the "spread" between average wholesale prices and actual prices, Ven-A-Care President Zachary Bentley told a Congressional hearing on AWPs Sept. 21.

"There are still a great number of companies - Merck, Lilly, Johnson & Johnson, DuPont - who do not engage in this type of gaming the system," Bentley said during a joint hearing of the House Commerce/Health and Oversight Subcommittees.

"When they make a representation about the price of the drug, you may not like it because it may be high, but that's the price they sell it," he said.

The Key West, Fla. pharmacy Ven-A-Care was the "whistleblower" in several lawsuits filed against manufacturers over AWP pricing policies. The company also provided the Commerce Committee with documents related to the relationship between reported AWPs and actual prices.

Oversight Subcommittee Chairman Greenwood told the hearing that he intends to move a bill to address AWPs this year (¹ (Also see "Medicare Drug Reimbursement Fix To Be Added To House Spending Bill" - Pink Sheet, 24 Sep, 2001.)).

Bentley declared that companies with sound pricing policies would not be affected by changes to the reporting of AWP. "For companies playing the game honestly, it shouldn't affect them that much."

Ven-A-Care was the whistleblower in the Department of Justice lawsuit against Bayer over Medicaid reimbursement, which resulted in a $14 mil. settlement (² (Also see "Bayer Drug Prices To Be Monitored By HHS Under Medicaid Fraud Settlement" - Pink Sheet, 25 Sep, 2000.)). Ven-A-Care is also the whistleblower in a Texas lawsuit against the generic firms Warrick, Dey and Roxane over asthma drug prices (³ (Also see "Warrick Albuterol Medicaid "Overpayments" Total $14.6 Mil. -Texas Argues" - Pink Sheet, 11 Sep, 2000.)).

Bentley described Ven-A-Care's involvement in the cases as resulting from his "shock" at receiving a Medicare reimbursement for leucovorin "that exceeded our cost by approximately 1000%." The "beneficiary's copayment actually exceeded the cost of the drug to Ven-A-Care," Bentley said.

"I thought the Florida Medicare carrier had made a mistake," Bentley continued. "I attempted to return the payment, only to learn that the Medicare program in fact assumed that the cost of leucovorin was many times greater than the true price available to even a small company such as Ven-A-Care."

"In 1991, Ven-A-Care was solicited to enter into a physician joint venture designed to split the proceeds of such excessive reimbursements with doctors in a position to prescribe expensive infusion drugs to AIDS patients," Bentley said.

"We believed that this proposal was nothing more than a kickback scheme, and we elected to not participate." As a result, Ven-A-Care was driven "effectively...out of business."

Ven-A-Care ultimately assisted in a false claims case resulting in a $500 mil. settlement paid by NMC/Fresenius.

"Later, when Ven-A-Care attempted to rebuild its business with a focus on oncology drug therapies, we encountered demands that we enter into similar kickback arrangements with oncologists associated with yet another larger national healthcare company," Bentley asserted.

"Again, we declined to participate. Instead, we redoubled our efforts to shine the light of day on these shadowy schemes," Bentley said.

Rep. Lois Capps (D-Calif.) asked whether Ven-A-Care was "in this business of looking at these discrepancies full time now?"

"Right now we spend most of our time trying to educate and shine the light on what we feel are abusive practices and abusive reimbursements, so that we can actually have a level playing field someday and go back to what we've always done," Bentley responded.

Manufacturers are "seeking to deflect scrutiny by contending that Congress and the executive branch have created a flawed reimbursement system," Bentley said. "This argument is specious, because the system works well as long as drug companies tell government insurance programs the truth about their prices," he maintained.

Witnesses from the HHS Inspector General's Office and the General Accounting Office suggested that Congress should enact legislation using the Medicaid "average manufacturer's price" as the new payment standard (⁴ (Also see "Medicaid Rx Price Data Could Be Used For Medicare Payments - HHS IG" - Pink Sheet, 1 Oct, 2001.)).