Monday, October 12, 2009

Expensive Medicine For Everybody!

Thanks to a tip from Moonbootica during a chat at Eschaton yesterday, I learned that our pharmaceuticals have been ripping us off even more than I was aware of, and may very well be doing the same to Britain. It seems that one of the two suppliers of the H1N1 flu vaccine for Great Britain, Baxter, has been sued by multiple states for gross overcharging of Medicaid, and the company settled those suits rather than litigate.

From the UK's Guardian:

A company producing swine flu vaccine for Britain has paid millions of pounds in out-of-court settlements after being accused of fraudulently overcharging for medicines.

Baxter, the US pharmaceutical giant, reached at least seven huge settlements over the past 12 months, some of them for millions of dollars. The company had been accused of fraud amid allegations that it had overpriced medicines by as much as 1,300%. ...

Baxter became involved in prolonged litigation after being accused of fraudulently overcharging Medicaid, the US health programme that provides a safety net for the poorest families. Executives from the company paid out $2m to the Kentucky state government this year. Jack Conway, the Kentucky attorney general, said: "All of this could have been easily avoided if Baxter… had done what the law requires: report truthful prices. ...

Despite the scandal, Baxter was one of two companies awarded the contract to produce 132 million doses of vaccine for Britain. The other company, GlaxoSmithKline, received a "positive opinion" for its drug, Pandemrix, last month. Britain is reported to have ordered enough swine flu vaccine to give each person two doses. The growing cost of the vaccines has prompted concerns from politicians, but the Department of Health and the drug companies have declined to say exactly how much each vaccine costs.

Now, two things came to mind when I read that story. The first is that it appears that Baxter just might be pulling the same scam on Britain that it obviously pulled on various states in the US. Charging what the market will bear, even when lives are at stake, is something our pharmaceutical companies are great at. That they've expanded such practices to the international market should come as no surprise, but that the British would put up with it is a surprise.

Second, the nefarious ways of the pharmaceutical industry is a pet peeve of mine, as you may have noticed. I generally keep track of the news on that industry, and I wasn't aware of the state suits against Baxter and their settlements, even though one of the states involved was my own. I did take the month of August off from blogging, but I still read the news, both on line and in paper form, yet this caught me off guard. Once again, our free press has failed in its duty.

Because of that, I did a little nosing around for news of the company, primarily with respect to its financial health and found this July 16,2009 report:

The company posted net income of $587 million, or 96 cents a share, compared with $544 million, or 85 cents a share, for the same period in 2008. The weighted average number of outstanding shares for the latest quarter shrank to 612 million from the prior year's 638 million.

Keep in mind that the Guardian reported these settlements occurred over the last year, yet in the second quarter of this year, Baxter still posted a hefty profit and managed to buy back a chunk of outstanding shares. In other words, those settlements made almost no difference to the company's operations and profitability.

But, hey! That's the beauty of the market place, right?



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