What Happens When Manufacturers Defraud Medicaid

Founded in 1964, Medicaid is a public health insurance initiative meant to help low-income Americans access a broad range of life-saving medical services and products. However, some care providers and pharmaceutical companies seek to get more money out of Medicaid and commit fraudulent acts. Cases of Medicaid fraud may involve inaccurate billing, false diagnosis, unnecessary prescriptions, and the gouging of service rates. Pharma companies can also defraud Medicaid by inaccurately paying rebates—excess funds that Medicaid paid in exchange for a drug’s best price—and selling unapproved drugs that could cause harm to others.

Medicaid frauds are a great disservice to the public as they negatively impact the state of health care in the country. By misrepresenting the truth for personal gain, care providers and pharma companies squander scarce resources and even put patients at risk due to unneeded treatment or the withholding of medically required services. Because these types of crimes affect the general public, everyone needs to have an idea of what Medicaid fraud can look like—especially when it involves medicine manufacturers. That said, here are some of the biggest cases of Medicaid fraud by pharma companies that you need to know about.

thermometer on pile of pills — *Pharma firms can defraud Medicaid by not paying the right rebates and selling unapproved products. Image source: Pixabay*

Takeda Pharmaceuticals

Among the recently known cases that also involve Medicaid fraud are the Uloric side effect lawsuits faced by Takeda Pharmaceuticals. Allegedly, Takeda defrauded Medicare and Medicaid by failing to report the serious health complications of using Uloric (febuxostat), a prescription drug used to treat gout. Uloric, which received FDA approval in 2009, reduces joint inflammation by lowering the body’s uric acid levels.

Since then, Takeda has faced accusations of defrauding Medicare and Medicaid by not reporting Uloric’s tendency to cause severe cardiovascular side effects such as heart failure and cardiac risk. Moreover, a whistleblower claimed that several patients have already died due to Uloric intake. Uloric has also been linked to side effects such as kidney damage, stroke, severe bleeding, bone marrow failure, and liver failure.

In 2019, the FDA issued a black box warning—the most serious of FDA warnings—to Uloric. You can see more about the case here.

Wyeth

One of the biggest Medicaid fraud recoveries to date involves Wyeth, a wholly-owned Pfizer subsidiary. In 2016, Wyeth has been accused of distorting rebate payments for its Protonix product, a type of proton pump inhibitor intended to treat excessive gastric acid production. The company’s alleged actions resulted in a joint federal and multistate settlement worth a total of $784.6 million.

According to government plaintiffs, Wyeth did not report their best prices on Protonix IV and Protonix Oral Tablets, which were sold to hospitals across the US. Additionally, the lawsuit claimed that Wyeth failed to properly allocate discounts under its Medicaid contracts. The pharma company has been ordered to pay a total of $371 million to the states involved and over $413 million to the federal government.

doctor offering two pills to a patient — *Prescribing drugs that are not FDA-approved can put others at risk of serious health issues. Image source: Pexels*

Merck & Co.

In 2008, Merck & Co. was ordered to pay over $650 million to the US government following two lawsuits involving Medicaid fraud. The lawsuit alleges that Merck violated Medicaid’s rebate statute by not paying proper rebates to the government. Merck also allegedly paid health providers to prescribe two of their products instead of competitor brands. The two drugs are Zocor, a cholesterol-lowering medication, and Vioxx, an arthritis painkiller.

It should be noted that Merck removed Vioxx from the market in 2004 due to heightened risks of heart attacks and strokes. For the 2008 lawsuit, Merck agreed to pay $399 million plus interest to pay for kickback and rebate allegations.

The second lawsuit was filed by a physician who accused Merck of offering significant discounts for its Pepcid medication if a hospital agreed to prescribe the drug instead of competitor products. Pepcid, a medication used to decrease acid production in the stomach, is used to treat indigestion, peptic ulcer, and gastroesophageal reflux. Merck paid $250 million in settlement fees plus interest for this case.

four people inside mart — *Manufacturers must be held accountable for their actions that might affect thousands of people. Image source: Unsplash*

The Need for Manufacturer Accountability

At its core, Medicaid is meant to help Americans who cannot afford to pay out of pocket for services that could save their lives. Allowing pharma companies and health providers to get away with Medicaid fraud prevents the government from allocating funds to shoulder the medical needs of low-income populations, particularly those who are chronically ill and disabled. And as mentioned previously, prescribing medications that have not been approved in exchange for monetary gain will only endanger people who already have health issues to begin with.

In the end, Medicaid fraud does not only impact big pharma manufacturers. It affects all of us who are paying and trusting the government to look out for its constituents, including the poor and vulnerable. All companies should be held accountable for their actions, especially when they involve the thievery of funds intended for the betterment of all citizens.