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The United States Department of Justice reported that Apotex Corporation, among other drug manufacturers, paid over $400 to settle violations of the False Claims Act, characterized by increasing and maintaining high prices for generic drugs (Office of Public Affairs, 2021). Apotex increased the price of its generic drug, pravastatin while engaging in price-fixing agreements with suppliers to cut competition. However, it increased the risks of patients being denied access to the drugs because of the high prices. Apotex agreed to an out-of-court settlement of $49 million with the State of Texas for conspiring to raise and maintain high prices for pravastatin.
The report represents Medicaid fraud because it involves the conspiracy of a drug manufacturer to collaborate through kickback schemes to increase and maintain high prices for generic drugs, ensuring guaranteed higher returns from Medicaid with minimal competition. According to Gunasekera and Brooker (2021), each of the three companies, Apotex, Taro Pharmaceuticals, and Sandoz, paid each other in kickbacks to trade insider information that would ensure they maintained control over the supply of the generic drugs. The fraudulent activity is observable in the companies’ decisions to increase the price of generic drugs after engaging in unlawful competitive schemes that shut other drug manufacturers from supplying Medicaid programs. Additionally, the companies secretly paid each other kickbacks for insider information that eliminated competition from Medicaid programs.
In conclusion, the activity of Apotex and the other companies cannot be considered abuse but fraud. The aspect of fraud in this scenario is because it involves a conspiracy to control the supply of the drugs to Medicaid at a higher price while eliminating competition using illegal schemes. In addition, the activities led to Medicaid paying higher than average for generic drugs for several years.
References
Gunasekera, E., & Brooker, R. (2021). Nothing generic about generic pharma fraud. National Law Review, 11(278), 1. Web.
Office of Public Affairs. (2021). Pharmaceutical companies pay over $400 million to resolve alleged false claims act liability for price-fixing of generic drugs. The United States Department of Justice. Web.
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