AG Roy Cooper Column #2

New provision could leave North Carolina taxpayers out of national refunds

Drug violations could send millions to other states, leave NC paying too much

Raleigh: North Carolina taxpayers and consumers could lose millions in legal settlements won because of illegal drug marketing and other violations if House Bill 542 becomes law, Attorney General Roy Cooper said Thursday.

State taxpayers pay for drugs purchased directly by the state, funded by Medicaid, and the State Health Plan. Misdeeds by drug manufacturers are investigated and prosecuted by the state Attorney General’s office, which also gets money back when everyday consumers are wronged.

North Carolina could become only the second state in the country where pharmaceutical manufacturers could be allowed to do or say anything about a drug as long as it has basic FDA approval.

“North Carolina’s work to uncover wrongdoing and get reimbursements is at risk, and creating this huge loophole is foolish,” Cooper said. “Instead of increasing the effort to crack down on Medicaid fraud this bill sets our state apart as a place with no rules and no consequences.”

Many of the settlements state AG investigators reach are with the cooperation of other states and the federal government. Because many of our Medicaid pharmaceutical recoveries are brought with federal prosecutors under a federal False Claims Act, North Carolina could find itself watching other states and the federal government recovering their costs while North Carolina is left without reimbursement.

Investigators in the Attorney General’s Medicaid Fraud and Consumer Protection divisions seek redress for consumers and taxpayers when harmful or defective pharmaceuticals are put on the market.  Each year, North Carolina recovers millions of dollars as a result of drug related fraud, and the money goes to refund the Medicaid program, support public schools and other public purposes. The settlements resolve allegations ranging from failure to properly disclose side effects; withholding of negative information from scientific studies; marketing drugs for improper uses; marketing to children drugs that are only safe for adults; and more.

The bill puts that in doubt, meaning that North Carolina consumers and taxpayers paid for drugs that, at best, were ineffective or unnecessary, and at worst, were harmful.  The provision could keep North Carolina from recovering even the bare cost of purchase for a contaminated drug placed on the market.  It could also ban recovery when a drug company became aware of a problem with a drug after FDA approval.  This affects not only consumers who purchased the product, but all taxpayers in the case when the State is the purchaser of the drug.

North Carolinians would have to watch from the sidelines as the Federal government and other States recover settlements for the same harms and fraud happening in our own state.

The Attorney General’s Medicaid Investigations Unit has recouped more than $400 million for North Carolina over the past decade, which includes numerous pharmaceutical settlements. The most recent state budget approved by the legislature included 25 new Medicaid fraud attorneys and investigators, nearly doubling the unit in size.

“Pharmaceutical companies and the research they do to bring effective drugs to the market have made us healthier and brought economic success to our state. But when the rules are broken they should be made to reimburse taxpayers and consumers,” Cooper said.

Legislation that hamstrings state prosecutors from going after wrongdoers could result in harm to patients and less safe drugs being placed in North Carolina pharmacies, Cooper said.  In the unlikely event that a drug company would sell a harmful drug, state prosecutors could be powerless to intervene on behalf of consumers and taxpayers, and removes an incentive for companies to ensure the safest product available.  ###