At least for now, Hawaii has completed its litigation against pharmaceutical companies that fleeced the state for Medicaid prescriptions. The state is believed to have won back tens of millions of dollars through out-of-court payoffs. For no good reason, a state judge has ordered that the settlement amounts be kept secret.
Prescription drug companies were ripping off the Medicaid system for years until a series of whistle-blowers came forward. Over the last three years, the federal government received settlements of $515 million from Bristol-Myers Squibb, $520 million from AstraZeneca, $1.4 billion from Eli Lilly and this month $313 million from a unit of Forest Laboratories.
A year ago, Pfizer paid $2.3 billion, including a $1.2 billion criminal fine, the largest in U.S. history, to make amends for the illegal marketing of the painkillers Bextra and Lyrica, the schizophrenia medicine Geodon and the antibiotic Zyvox. Last week, the U.S. Justice Department joined a 19-state lawsuit against Pfizer because of suspect billings to public health programs.
Cases like these are ordinarily shrouded in secrecy until they end in out-of-court settlements, at which time the public learns of the amount. An indication of what should rightly be paid and made public is indicated by the rise in Hawaii’s Medicaid drug services from $20.7 million in 1997 to $112.5 million in 2004, according to the state’s lawsuit.
However, Hawaii Circuit Judge Gary Chang ruled that the "potential for successful alternative dispute resolution" of cases that are still active on the mainland would be "severely jeopardized" by disclosing terms of final settlements. Back in 2006, Hawaii, in concert with other states, had sued 44 pharmaceutical companies for allegedly inflating prices, resulting in drug overpayment for tens of thousands of isle Medicaid patients.
Last Wednesday, the state settled with the suit’s last civil defendant, drug giant Merck Sharp & Dohme Corp. Doubtful as Chang’s secrecy order was from the start, surely now is the time to lift it: Drug makers should be made to account publicly for their shameful attempts to bilk consumers and taxpayers via the exorbitant Medicaid costs.
Brook Hart, a Honolulu attorney for a major drug manufacturer, said the Hawaii settlements should be kept confidential to avoid them being used to settle mainland cases instead of allowing those to be settled "on the merits" of each case.
However, Rick Eichor, a Honolulu lawyer representing the state, said he is aware of no other court order in the country sealing the settlement from the public. Indeed, attorneys general of Missouri, Pennsylvania and Kentucky have disclosed settlements in different cases where Hawaii was a co-plaintiff, but Hawaii Attorney General Mark Bennett is ordered by Chang not to divulge the settlement amounts he has been authorized to collect from those companies.
Eichor is right in opposing further concealment of the settlements, explaining that the public has a "strong interest" in knowing the amount of public funds the Attorney General’s Office brought back to the state. Chang should reverse his ruling in a Friday hearing and allow the sun to shine on the state’s court information — and on the millions of dollars due taxpayers.