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A senior citizens’ group last week filed a class action RICO suit against Johnson & Johnson and one of its pharmaceutical subsidiaries, alleging inflation of prices charged under Medicare for the drug Remicade. The suit alleges that Johnson & Johnson and Centocor Inc. conspired to cheat the government by inflating the published “average wholesale price” for Remicade, which is used to treat rheumatoid arthritis and Crohn’s disease. Since Medicare Part B pays just 80 percent of the cost of certain drugs, the suit alleges that the inflated prices were passed on to the senior citizens and their insurers, who pay the remaining 20 percent. The suit also alleges that the manufacturers paid kickbacks and bribes to doctors to increase Remicade’s market share. “This scheme has reaped huge profits at the expense of consumers and third-party payors,” the suit alleges. Attorneys Marc H. Edelson of Hoffman & Edelson in Doylestown, Pa., filed the suit along with Dianne M. Nast of Roda & Nast in Lancaster, Ira Neil Richards of Trujillo Rodriguez & Richards in Philadelphia, Kenneth A. Wexler and Elizabeth Fegan Hartweg of Wexler & Associates in Chicago, and Daniel E. Gustafson of Heins Mills & Olson in Minneapolis. The lead plaintiff in the suit is the Action Alliance of Senior Citizens of Greater Philadelphia, a nonprofit group that is seeking to represent a class that includes any individual or entity that has paid any portion of the Medicare co-payment for a Remicade prescription since 1993. According to the suit, Medicare payments for prescription drugs are calculated on the basis of an average wholesale price, or AWP, that is published in the “Red Book.” The suit says Remicade’s manufacturers inflated the drug’s AWP by reporting “substantially higher” prices than they were actually charging for the drug in the private sector. “The AWP set by defendants does not in any way accurately reflect the plain meaning or reasonable interpretation of the words ‘average’ or ‘wholesale’ that are critical components of that figure,” the suit alleges. The suit also accuses the manufacturers of engaging in a “fraudulent marketing scheme” in which doctors were given free samples of the drug and then encouraged to charge Medicare, patients and insurers for the costs of the free samples. The suit, Action Alliance of Senior Citizens of Greater Philadelphia v. Johnson & Johnson, 02-cv-2076, has been assigned to U.S. District Judge Herbert J. Hutton of the Eastern District of Pennsylvania.

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