S.C. Goes After Drug Companies

AG applies leverage to discourage pharmaceuticals from gouging the taxpayers

Good for S.C. Attorney General Henry McMaster for suing five pharmaceutical companies believed to have overcharged the state more than $40 million for prescriptions bought by state employees and medically indigent South Carolinians. In lawsuits filed last week, McMaster accuses the companies, Abbot Laboratories, Baxter International Inc., Dey L.P., Boehringer Ingelheim Roxane Inc. and Shering-Plough Inc., of inflating the wholesale prices for drugs dispensed to members of the State Health Plan and the Medicaid program - about 30 percent of the state's population in all.

In going after the drug companies, McMaster is enforcing the state contracts under which drug companies receive access to both programs' customers in return for volume discounts for prescription drugs. Despite these contractual efforts to control drug costs, S.C. Medicaid has spent more than $300 million on prescription drugs in recent years and the State Health Plan has spent more than $100 million. He alleges that the companies intentionally inflated the average wholesale price levels on which those contracts are based.

Both state health plans, it should be noted, are open-ended in nature. The state has little control over how much the plans spend on prescription drugs during a given year because doctors decide which drugs to prescribe. Legislators in recent years have had a hard time budgeting for prescription drugs because they can't reliably predict what prescriptions are going to cost.

It's possible, on other words, that the drug companies can successfully defend the charges that McMaster has leveled against them. But because the lawsuits are civil filings, the companies he has sued - he may sue more - will be obliged to defend their price structures if the cases go to trial. Unlike criminal cases, civil defendants must prove their innocence.

Just the same, McMaster deserves credit for applying the only leverage available to the state to force drug companies to justify their wholesale prices - and to deter the other drug companies with which the state does business to from overcharging the state. For being assertive in protecting the interests of the taxpayers who ultimately pay for prescription drugs, McMaster deserves great credit.