Government Vows To Crack Down On Best-Price Fraud

One of Big Pharma's biggest, easiest and most lucrative schemes is to cheat the Federal Government's "Best Price" law, whereby they are required to offer the lowest price possible for patients receiving government aid.

Because of the vast quantity of pharmaceuticals distributed throughout the country, and the complicated way in which their prices are determined, the job of determining the lowest price has widely been left in the hands of the drug companies themselves. In order to make an extra buck, many of these companies will either raise this price in order to receive higher medicare rebates or work out deals with private employers to lower the price in order to make purchasing their own drugs (versus those of others) more attractive.

The U.S. Government has announced that it is taking new steps to crack down on this industry-wide problem by taking some of this responsibility out of the hands of these companies. According to a recent announcement by the Department of Health and Human Services, the government will begin fining companies as much as $10,000 a day for failing to comply with price-reporting obligations through a law that has been in place since 1990 but, up until this time, has never been enforced.

This is a positive first step toward taming the wild landscape that is the pharmaceutical industry. Beyond saving money by curbing these abuses, the government sends a clear message that it is watching for this law and will treat offenders harshly.

Indeed, shortly after the government released the statement, numerous companies reported that they "may" have found pricing irregularities. Surprising? Not much.

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