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FEATURE Texas Goes After Big Pharma AG Greg Abbott is bringing in millions for the state by going after corporate drug fraudsters BY ROBERT BRYCE L-R: John Clark, James Breen, asst. attorneys general Patrick O’Connell, Cynthia O’Keeffe, Raymond Winter, Jarrett Anderson photo: Jana Birchum 111Vhen it comes to fraud, Enron, Tyco, and Big Tobacco have nothing on Big Pharma. Some of the world’s biggest pharmaceutical and health care companies are paying huge fines to settle whistleblower lawsuits that allege they manipulate the prices of their drugs and services in order to defraud Medicaid and Medicare. And the state of Texas is leading the charge against the fraudsters. In September of 2000, Texas became the first state to intervene in whistleblower-initiated litigation focused on drugpricing fraud. And although the Civil Medicaid Fraud Section of the attorney general’s office has only litigated a few cases, it has already received a total of $45.5 million in settlements. The payments came from Dey Inc., a subsidiary of German Jersey-based Schering-Plough Corp. and its subsidiary, Warrick Pharmaceuticals Corp. \(Schering-Plough’s 2004 revenues: The state has also received another $15 million or so from health care providers in other fraud-related cases. Nationally, fraud-related settlements from these whistleblower lawsuits have totaled several billion dollars. More big settlements are coming. The attorney general’s office, in conjunction with a Florida entity known as Ven-ACare of the Florida Keys, has lawsuits pending against a host of other big drug companies including Roxane Laboratories, Baxter Healthcare, B. Braun Medical Inc., Hospira, Inc., and Abbott Laboratories Inc. Altogether, the eight lawyers at the AG’s fraud unit are pursuing about 80 investigations, all of which involve some type of Medicaid fraud. The health care industry’s enormous size makes it a ripe target for fraudsters: Medicare and Medicaid are the world’s largest health care underwriters. Medicaid now covers some 53 million low-income and disabled Americansabout one of every six people in this country. Over the past 10 years, Medicaid spending has doubled. In 2004 alone, the program cost taxpayers some $300 billion. Medicaid’s drug-buying program is a particularly juicy target. Each year, the program, which is paid for by both state 6 THE TEXAS OBSERVER MARCH 4, 2005