Attorney General Accuses Drug Companies of Fraud

California accused GlaxoSmithKline, Abbott Laboratories and 37 other pharmaceutical companies of defrauding the state’s $34-billion Medi-Cal health program for the poor by inflating prescription drug prices.

In a lawsuit filed Thursday in federal court in Boston, California Atty. Gen. Bill Lockyer said the companies supplied inflated prices to industry publications used by Medi-Cal to reimburse healthcare providers for drug costs.

“We’re dragging these drug companies into the court of law because they’re gouging the public on basic life necessities,” Lockyer said in a statement. “The days of prescription pricing fraud are over.”

California joins more than a dozen other states in suing drug makers for allegedly charging too much for medicines used in government health programs. In California, healthcare providers are reimbursed for drugs dispensed to Medi-Cal patients at rates based on pricing data supplied by the manufacturers.

Lockyer said his action was prompted by a whistle-blower lawsuit filed in California by a pharmacy, Ven-A-Care, alleging that the pharmaceutical companies provided false and misleading drug pricing information that Medi-Cal used to establish its drug payment rates.

An investigation revealed pricing manipulation that led Lockyer to file suit against Abbott and Wyeth Pharmaceuticals Inc. in 2003, he said. Evidence gathered since then prompted him to amend the original complaint Thursday, adding more than three dozen additional drug makers as defendants. Lockyer’s new suit was filed in Boston, where similar suits have been consolidated in one court.

Wyeth has been dropped from the lawsuit, but it remains part of the state’s ongoing investigation, said Tom Dresslar, Lockyer’s spokesman.