Biden Acts to Ensure Pharmaceutical Competition, Fair Prices

Today, Attorney General Beau Biden announced the settlement of a civil lawsuit against Barr Pharmaceuticals. The suit charged the company with antitrust violations that have prevented generic versions of the popular contraceptive Ovcon? from reaching the marketplace. The settlement, involving 34 states and the District of Columbia, prevents Barr from entering into certain anti-competition agreements and requires the company to pay $5.9 million in penalties and fees.

“Today we stood up for consumers against greed,” stated Attorney General Joseph R. Biden, III. “These illegal activities forced Delawareans to pay more for a drug when a lower-priced version could have been available. Keeping the generic drug off the market stifled the kind of healthy competition that can keep prices low, and that is unacceptable. The Delaware Department of Justice will use all of its authority to ensure competition and protect consumers” access to affordable products.”

The lawsuit, filed in 2005 in the U.S. District Court for the District of Columbia, alleges that pharmaceutical manufacturer Warner Chilcott paid Barr a total of $20 million to keep it from marketing a generic version of Ovcon?. According to the lawsuit, Ovcon? has been sold in the United States since 1976 and Warner Chilcott became its exclusive U.S. distributor in 2000.

In early 2003, Barr announced that it would introduce a generic version of Ovcon? by the end of that year. The states” lawsuit alleges that Warner Chilcott paid Barr $1 million in an agreement designed to prevent Barr”s generic product from being offered to consumers. According to the suit, after Barr obtained approval by the U.S. Food and Drug Administration to market its drug, Warner Chilcott paid an additional $19 million to Barr in order to keep its drug off the market.

Delaware and the participating states sought fines and a court order to prevent Barr from engaging in similar behavior. Today”s agreement:
– Requires Barr to pay $5.9 million nationwide in penalties, costs, and fees. Delaware will receive more than $80,000, which will be paid to the state”s Consumer Protection Fund.
– Prohibits Barr from entering into similar anti-competitive agreements in the future.

The states previously settled a separate suit against Warner Chilcott in June, 2007.

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Biden Effort Leads to Closure of Dover Crack House

Wilmington, DE – Today, Attorney General Beau Biden announced the historic closure of a  property under the Delaware Drug Nuisance and Social Vices Abatement Act. At a February 15,  2008 hearing sought by the Delaware Department of Justice, a crack house in Dover was declared  the site of drug and vice crime and was closed to protect the community.

“I am pleased that for the first time ever we used Delaware’s powerful nuisance Abatement Act to completely close down a well-known drug haven,” stated Attorney General Joseph R. Biden, III. “Nuisance property owners should be on notice: you will not get away with  committing or permitting criminal activity on your property. We will use every tool in our arsenal to weed out crime, reclaim our neighborhoods and protect our communities.”

The Delaware Department of Justice obtained all the conditions it sought against the property, located at 176 South Governors Boulevard in the Capitol Park neighborhood of Dover. In his Friday ruling, Superior Court President Judge James T. Vaughn Jr. ordered the property to be closed for the remainder of the litigation and that it be shuttered by the Delaware State Police.

Litigation against the property owners is ongoing. The conditions imposed Friday will remain in effect until a hearing to determine a permanent status of the property is held in early May.

In August, 2007 Attorney General Biden announced an expanded statewide effort to reduce crime using Delaware’s newly enhanced Nuisance Abatement Act. The ruling announced today marks the second time in recent weeks that the Delaware Department of Justice has petitioned a court to order action taken against a nuisance property. In December, 2007 a judge ordered two apartments on a West Rehoboth property shuttered, evicted all tenants besides the owners, and  strictly limited access to the property.

Enforcement actions under the Nuisance Abatement Act can take a variety of forms including closure of a property. The Delaware Department of Justice actively cooperates with state and local police agencies, local authorities, and civic organizations to identify nuisance properties across Delaware. To date the Department has issued written notices statewide to the owners of more than 20 residential and commercial properties. The notices state that a nuisance exists on the property and they give owners the choice of either voluntarily cooperating to clean up the illegal activity, or of defending themselves in court and being forced to clean up the crime by court order.
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Attorney General Biden Secures Lower Drug Prices For Delaware Consumers

Wilmington, DE – Delaware Attorney General Beau Biden announced today that the State and Delawareans taking prescription medications will receive more than $477,000 following a consumer protection investigation of Caremark Rx, L.L.C., one of the nation?s largest pharmacy benefits  management companies. The settlement, involving 28 states and the District of Columbia, requires Caremark to significantly change its business practices and pay $38.5 million nationwide.

“This agreement secures lower drug prices for Delaware consumers,” Attorney General Joseph R. Biden, III stated. “It ensures that consumers can make informed decisions about the prescription drug choices available to them. Pharmacy benefits management companies have an obligation to obtain products at the lowest price and to fully disclose cost information to consumers.”

Delaware will receive $177, 418 to benefit low-income, disabled or elderly consumers taking prescription medications, promote lower drug costs for residents across the state, and provide consumer education. Caremark will also pay $300,000 to the Delaware Consumer Protection Fund to reimburse the State for fees and costs associated with the investigation. In addition, Caremark will pay up to $2.5 million nationwide to reimburse patients who incurred expenses related to certain drug switches. Consumers eligible for reimbursement will be contacted directly by Caremark.

Pharmacy benefits management companies enter into contracts with employer health plans to process prescription drug claims for patients, negotiate volume discounts with drug companies, negotiate discounts with retail pharmacies, and dispense drugs through mail order pharmacies. Over the past thirty years, their services have evolved to include complex rebate programs, pharmacy networks, and drug utilization reviews.

The Delaware Department of Justice alleges that Caremark and two of its subsidiaries, Caremark, L.L.C. and CaremarkPCS, L.L.C. (formerly AdvancePCS), engaged in deceptive business practices by encouraging doctors to switch patients to different prescription drugs and representing that patients and/or health plans would save money. However, doctors were not adequately informed of the effect that drug switches would have on costs to patients and health plans. In addition, Caremark did not clearly disclose that it would retain rebates accruing from switches and not pass them directly to client health plans.

The agreement announced today prohibits Caremark from soliciting drug switches when:

* The cost to the patient will be greater than the cost of the originally prescribed drug
* The originally prescribed drug has a generic equivalent and the proposed drug does not
* The originally prescribed drug?s patent is expected to expire within six months

The agreement also requires Caremark to:

* Inform patients and prescribers what effect a drug switch will have on a patient?s co-payment
* Inform prescribers of Caremark?s financial incentives for certain drug switches
* Obtain express, verifiable authorization from the prescriber for all drug switches
* Monitor the effects of drug switches on patient health
* Adopt a code of ethics and professional standards

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Attorney General Beau Biden Announces Medicaid Fraud Settlement with Pharmaceutical Manufacturer Merck and Co.

Wilmington, DE – Delaware Attorney General Joseph R. Biden III announced today that the Delaware Medicaid Program will receive $960,380 and the state treasury will receive a $48,514 penalty as part of two related national settlements with Merck & Co., Inc. (“Merck”). The settlements – totaling $649 million – involve 49 states, the District of Columbia and the federal government.

“This is a significant recovery for Delaware taxpayers,” Attorney General Biden said. “Any company that is considering defrauding Delaware taxpayers should know that we will hold them accountable to the fullest extent of the law. I pledge to the people of our state that the Delaware Department of Justice will continue to join with other states and the federal government in efforts to recover taxpayer dollars for Delawareans.”

“Attorney General Biden has provided the Delaware Medicaid Fraud Control Unit with the resources it needs to combat sophisticated pharmaceutical fraud,” stated prosecutor Daniel R. Miller, the Director of the Medicaid Fraud Control Unit (MFCU) in the Delaware Department of Justice. “Those resources permitted the Delaware Department of Justice to play a leading role in the investigation, prosecution, and settlement of these two cases.”

The agreements with Merck resolve allegations that the company failed to pay rebates due to states’ Medicaid Programs under the Federal Medicaid Drug Rebate statute (the “Best Price” statute). The settlements also resolve qui tam claims filed by whistleblowers in United States District Courts in Pennsylvania, Nevada, and Louisiana.

Federal law requires pharmaceutical manufacturers to give state Medicaid Programs the benefit of the lowest or “best” price available for their products. Manufacturers are required to regularly file “best price” information with the Centers for Medicare and Medicaid Services (“CMS”). This information is used to calculate rebates to be paid by manufacturers to the state Medicaid Programs. In general, lower “best prices” result in higher rebate obligations. In an exception to the statute, known as the “nominal price exception,” extremely low prices which are “merely nominal” in amount (defined as 10% or less of the Average Manufacturer’s Price (“AMP”) are exempt from the best price reporting requirement. The states have maintained that “merely nominal” means that the discounted price may not be tied to any conditions such as attainment of a certain market share or preferred formulary status.

The Pennsylvania and Nevada cases involve programs that featured agreement under which Merck would sell specific drugs to hospitals at a 92% discount from the catalog price, but only if the hospitals reached certain market share percentages for the drugs. The states contended that this market share condition violated the nominal price exception and thus rendered the discounts subject to best price reporting. The states further contended that Merck’s failure to report these discounted prices to CMS as Merck’s best price resulted in substantially lower rebates to the state Medicaid programs.

The Louisiana case involved Merck’s sale of the drug Pepcid and another drug discount program. Under the Pepcid program, Merck sold the drug to hospitals in bundled pricing arrangements. In exchange for the hospital meeting a certain market share or other purchase requirement, Merck gave hospitals discounts of up to 92%. According to the government, the transactions under the discount drug program constituted “bundled sales” which required Merck to adjust “best price” among the different formulations to reflect these discounts. The states contended that Merck failed to reflect these discounts in their “best price” reports, resulting in less rebates paid to the state Medicaid Programs.

Delaware played a leading role in the investigation, prosecution, and settlement of these two cases. Going forward, the Delaware Department of Justice will continue to review alleged abuses of the nominal pricing exception, and any other alleged improper use of taxpayer money.

In addition to the monetary recovery announced today, Merck has entered into a Corporate Integrity Agreement with the United States Department of Health and Human Services. The Agreement requires Merck to market, sell and promote its products in accordance with all Federal health care program requirements.

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