Under both Medicare and many Medicaid programs, the price these government programs pay for drugs is based on a survey of the Average Wholesale Price (“AWP”) or the sticker price for that drug.  Commercial publishers of drug pricing information, such as Red Book or First DataBank, have published AWP data since 1970.  The AWP data is typically obtained from the manufacturers, distributors, and other suppliers of drugs.  AWP fraud occurs when pharmaceutical manufacturers falsely report inflated pricing information of their drugs as a means to induce insurance companies, drug wholesalers, pharmacists, Pharmacy Benefits Managers (“PBMs”) and Group Purchasing Organizations to purchase their drugs.  This type of fraud occurs when pharmaceutical manufacturers engage in a practice commonly known as “marketing the spread.”  Marketing the Spread occurs when pharmaceutical manufacturers sell the “spread” to those who purchase the drugs as a way to influence which drugs are prescribed.  The spread is the difference between what the pharmacy actually pays and what the government will pay in reimbursing for the purchase of the drug, which is based on AWP.  The larger the spread on a drug, the larger the profit for the health care provider or pharmacy who gets reimbursed by the government program.  Pharmaceutical manufacturers engage in this practice as a means of inducing insurance companies, drug wholesalers, pharmacists, Pharmacy Benefits Managers (“PBMs”) and Group Purchasing Organizations to push their drugs not based on what is best for the patient, but rather which drug is more profitable to the entity who gets reimbursed by the government programs.  These practices may violate the federal and state Anti-Kickback statutes as well as the federal and state False Claims Acts.

If you believe someone has knowingly committed Medicare or Medicaid fraud, such as AWP fraud, and you would like to learn more about or bring a whistleblower lawsuit, the qui tam lawyers at Keller Grover LLP can help you. These whistleblower lawyers understand qui tam litigation, including the whistleblower protection provisions, and strive to achieve the best possible results for their clients.