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ket were interested in the reimbursement ‘spread’ on Roxane’s Ipratropium Bromide and that the reimbursement `spread’ was a factor those customers would consider when deciding whether to buy Roxane’s product… Roxane learned from Mark Pope that having and marketing a higher governmental reimbursement rate was the way to attract key customers for its new product.” A Roxane spokesperson, Kelli Schobelock, provided a statement that said the company “vehemently denies that it knowingly and deliberately inflated its prices on generic drugs in order to increase profits. Its pricing complied with all laws and regulations. The evidence demonstrates that it provided the State exactly what it requested.” The company also insists that the e-mail from the Roxane sales director “has been mischaracterized and taken out of context.” The litigation with Roxane and the other drug makers has taken on even more importance now that President Bush has proposed cutting federal Medicaid spending by up to $60 billion over the next decade. The new proposals could place caps on the amount of federal money paid out to states for Medicaid. Faced with federal cutbacks and soaring Medicaid costs, several states, including Mississippi and Tennessee, are planning to cut Medicaid benefits to tens of thousands of residents. In Florida, the president’s brother, Gov. Jeb Bush, is pushing a plan that would give private insurers more control of Medicaid and cap the amount that Medicaid spends on each citizen. Texas faces similar challenges. The Texas Legislature, which is constantly short of money, must find an additional $1.6 billion this biennium to fund the state’s Medicaid program. In midFebruary, the chairman of the House Appropriations Committee, Jim Pitts, a Republican from Waxahachie, told reporters that, “the growth of Medicaid is a huge problem.” On February 17, the Odessa American quoted Pitts as saying that if the state cannot stem the growth of Medicaid costs, “in 10 years, we’ll only be able to fund Health and Human Services. We won’t be able to afford to build roads or educate our children. We have to get a grip now.” Gov. Rick Perry made similar comments. During a speech to the Texas Hospital Association in mid-February, Perry said that unless Medicaid was reformed, it would “bankrupt the states.” Perry has a point: Enrollment in the state’s Medicaid program is soaring. Between June 2002 and June 2003 the number of Texans enrolled in Medicaid grew by nearly 17 percent. Only two states, Arizona and Utah, had higher growth rates. Given that type of growth, cutting fraudulent Medicaid expenditures is absolutely critical. But the lawyers at the AG’s office and the private practice lawyers who work with them do not expect their litigation against Big Pharma to end any time soon. “These cases could last another five years or so if industry wants to continue with its Stalingrad-type defense,” says lawyer Breen. “But at the end of the day they will have to stand in front of twelve people and explain why they hiked their prices… And they don’t want to be in front of a jury. ” Indeed, as more attorneys general file suits against the drug makers, the workload for all of the attorneys involved becomes heavier. On January 27, Alabama Attorney General Troy King filed fraud litigation against 79 drug makers. O’Connell of the Texas AG’s office says that the Alabama litigation may give his office more information that could be used against additional drug makers. “The Alabama AG may have information that we don’t,” he said. And if they do, those companies are going to string out the process for as long as possible. “We have a limited staff and we can only go after a few of these companies at a time.” But he added that the state is not going to stop until it recovers the money it is entitled to. The drug companies “think the Medicare and Medicaid programs are their personal piggybanks. All we are doing is recovering the money that was stolen from us.” The trial against Roxane is expected to begin late this year. The case against Abbott Labs will go to trial in 2006. Observer con tributingwriterRobertBryce is the author most recently of Cronies: Oil, the Bushes, and the Rise of Texas, America’s Superstate Overcharging Medicaid Defendant Drug “List price” Actual Cost Percentage Spread Baxter Dextrose $928.51 $2.25 41,167% Baxter Sodium Chloride $928.51 $1.71 54,199% Boehringer Leucovorin Chloride $184.40 $2.76 6,581% B. Braun Sodium Chloride $11.33 $1.49 660% Bristol-Myers Vepesid $136.49 $34.30 298% Dey Albuterol Sulfate $30.25 $9.17 230% Immunex Leucovorin Calcium $137.94 $14.58 846% Pharmacia Vepesid $157.65 $9.47 1,565% Sicor Group Tobramycin Sulfate $342.19 $6.98 4,802% Watson Vancomycin $70.00 $3.84 1,567% Sources: Alabama Attorney General, Department of Justice MARCH 4, 2005 THE TEXAS OBSERVER 25