Johnson & Johnson ordered to pay $52 million to Pennsylvania, Medicaid for deceptive practices | lehighvalleylive.com

Johnson & Johnson today was ordered to repay more than $45 million to Medicaid and PACE, Pennsylvania's prescription medication program for the elderly, according to a news release from the Pennsylvania Attorney General's Office.

The New Jersey-based business must also pay more than $6.5 million in civil penalties to the programs, according to Commonwealth Court Judge Robin Simpson's ruling.

Pennsylvania sued Johnson & Johnson in 2004 for manipulating the drug pricing benchmark known as AWP (Average Wholesale Price) to boost sales and profits. Many government benefit programs reimburse doctors and pharmacies for brand name drugs using a formula that includes AWP, so the inflation scheme cost Medicaid and PACE $45,283,562, the release says.

The commonwealth contends that Johnson & Johnson created a spread between the AWPs and drugs' actual prices, the release says. Doctors and pharmacies received the spread as an incentive to stock or prescribe the company's drugs, the release says.

Simpson, who lives in Nazareth, found that Johnson & Johnson engaged in unfair and deceptive practices by failing to report accurate wholesale prices, the news release says. He also issued a permanent injunction against Johnson & Johnson, requiring the company to report accurate wholesale prices.

"Medicaid and PACE serve the most vulnerable Pennsylvanians, including low income families and seniors," state Attorney General and Gov.-elect Tom Corbett said in a prepared statement.  "Taking money from these programs by manipulating and inflating drug prices is simply unconscionable."

The verdict may hurt Johnson & Johnson's efforts to repair a reputation already damaged earlier this year by a string of recalls of medicines, contact lenses and him implants.

Company officials have said a public campaign to rebuild consumer trust is planned next year after 40 recalled nonprescription drugs are back on store shelves.

The civil trial was held in Easton at the Northampton County Courthouse.

via lehighvalleylive.com

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