How Drugmakers Sway States to Profit Off Medicaid

July 20, 2018

By Liz Essley Whyte, Joe Yerardi and Alison Fitzgerald Kodjak

Eight months pregnant, the drug sales representative wore a wire for the FBI around her bulging belly as she recorded conversations with colleagues at a conference in Chicago. Her code name? Pampers.

Her company, drugmaker Warner Chilcott, was using payments and perks to get doctors to prescribe its drugs. Then its sales representatives gave nurses hot tips about what kind of key symptoms would get Medicaid to pay for the drugs. The representatives also violated privacy laws by going through patient files and kept fax machines in their cars to fill out the paperwork meant for doctors.

“I remember thinking I can’t do this anymore,” said Lisa, who didn’t want her last name to be used so that news of her whistleblower legal settlement doesn’t cause problems for her family. “This company needs to be held accountable. And if nobody else is going to do it, then I am.”

Warner Chilcott, which is now owned by Allergan, was trying to beat one of the few mechanisms set up by state Medicaid agencies to hold down drug costs for taxpayers and ensure safety for patients.

Medicaid, which uses state and federal tax dollars to pay for health care for 76 million poor or disabled Americans, tries to ensure that patients get drugs that work the best and yet are also affordable. States put those drugs on what they call “preferred drug lists.” While Medicaid must pay for nearly all drugs by law, states can make it harder to get more expensive or less effective drugs by requiring doctors to fill out cumbersome administrative paperwork to prescribe those not on the preferred lists.