Pharmaceutical Lawsuit

Dec. 15, 2005

Transcript:

Jose Cardenas:
Tonight on "Horizon," a preview of the upcoming legislative session with two leaders. A look at the Arizona attorney general's lawsuit against pharmaceutical companies, and a conversation with the head of British Petroleum, who is visiting the valley today. Good evening, and welcome to "Horizon." I'm Jose Cardenas, in for Michael Grant. Next year's legislative session will begin January 9, the day governor Janet Napolitano will give her state of the state speech. A number of difficult issues will be considered during the session, and here to give us an idea of what to expect, the speaker of the house, representative Jim Weiers, and the minority leader of the house, representative Phil Lopes. Thank you for joining us on "Horizon." Let's start with the republican priorities for this session. I assume immigration will be one of them.

Jim Weiers:
It will.

Jose Cardenas:
Specifically what kinds of things are we going to be seeing?

Jim Weiers:
Last year I think we made some headway as to what the Prop 200, we're just coming back and making sure what the people voted for gets implemented and that the law is followed. Employer sanctions is something that has come up quite a bit. In the last couple months the idea is that you've got illegals running amok as some people would say, and we have no idea what those numbers are, but is it fair to place the owners back on the people that are illegal any more than the people who are hiring them knowingly? Probably some law enforcement proposals. There's got to be -- if you get back into the illegal immigration, most everything we do is going to touch on it. It doesn't matter if you're talking about E.L.L., which is the Flores case currently under consideration with the federal judge, if you're talking about school funding, if you're talking about social services, if you're talking about department of corrections, if you're talking about anything within the state, there is going to be an implication, and a connection when it comes back into the illegal immigration situation.

Jose Cardenas:
You talked about education. What about state funding for undocumented workers? Is that going to end?

Jim Weiers:
I don't -- I really don't know. To ask me what's going to happen, you know, is extremely unfair, because I have a vote. It's going to be the tone and the tenor of the legislature, and that of the governor.

Jose Cardenas:
One thing that will be a little different this session is we have a huge surplus. How is that going to be discussed, tax cuts I assume?

Jim Weiers:
I'd start by saying we don't have a huge surplus, that's kind of a misnomer. We have roughly somewhere between $700 million and $800 million in above anticipated revenues, and that's a huge difference. A lot of people don't quite understand what the difference -- the all analogy would be this -- you've got $20,000 in credit card debt and you're given a $200 bonus for Christmas and your wife says, we've got $200 extra dollars. Do you have 200 more than you anticipate, or do you still have obligation and debts you should be addressing? That's where we see the state.

Jose Cardenas:
Are we going to see tax cut proposals from the republicans?

Jim Weiers:
I'm sure there's going to be a number of issues addressed. We have to be prudent in how we look at the revenues. A lot of the revenues that currently are coming above projection are what we consider one-time shots. These are on capital gains, a lot has to do back in the housing market, the automobile surge, it's not maintaining. We were growing at 17 to 18%, the projection this year is 7% to 8%. If you get into a point where you start funding at a baseline and you don't have the continued money coming in, you get right back into a situation of deficit spending, which means raise taxes or cut programs.

Jose Cardenas:
That would suggest probably no proposed tax cuts from the Republicans, then.

Jim Weiers:
Republicans are always going to be proposing tax cuts. It really truly is the quid essential of good government, is to be able to reduce the burden back on people and get out of this nonsense is that government knows how to spend your money better than the person who makes it. So there will be proposals, it's just a matter of balancing out where we need to put money. The god put out an email that she would like to see money go back into the B.S.F., which is our rainy die fund. She agrees at this point we should be doing cash for schools, which is something we had to fight for, which she was opposed to last year. She did veto the fact we wanted to put the excess money back into the rainy day fund, but now proposes it. There's other issues we need to look at, like I said, we still have the Flores, which we don't know what is going to be the final resolution on that, and that's carried money with it. The L.T., that money was taken out with the intent of coming back and doing the D.P.S. on the funding.

Jose Cardenas:
That's the vehicle license tax.

Jim Weiers:
Right. Some people think it was hurt, but it came out of the vehicle license tax. We took that money away from road construction. And the governor also suggested we stop the rollover in the k-12, which is a gimmick the legislature has used for years of boring with money from one fiscal year to the next, delaying it for a month, giving us about $191 million excess on a balance sheet that pretends we're ball answered, which we're not.

Jose Cardenas:
Let me ask you about a couple other things that have been suggested. One is a ban on gay marriage. Are we going to see that this session?

Jim Weiers:
I don't think you'll see anything westbound the legislature. This is something; I think it's more than just being talked about. There's an initiative at this point starting out f. It hasn't been filed; I think it has been filed, collecting signatures on it.

Jose Cardenas:
What about dealing with the meth problem? A number of the cities have enacted legislation about some -- I bought Nyquil today, had to produce my I.D. and sign at the register.

Jim Weiers:
You had to show more documentation to buy Nyquil than you do to vote. People just don't really think logically. The state legislature with the laws we have in the book, this is going to be an issue, because cities at this point that are requiring this as an element back into the purchase of those are breaking state law. And as state lawmakers you have to ask yourself, is there sanctity as to the fact of law to where you have the municipalities actually breaking the state law?

Jose Cardenas:
So we might see something prohibiting the cities from enacting such legislation?

Jim Weiers:
You might see that. You may see sanctions against cities. There's been talk about retribution back in as to different forms. The best way to -- you get the attention of the cities and municipalities is through revenue sharing. Money is the breast milk of politics. I would rather find a way that really works, and all this with the crack, which is the end product of the methamphetamines, come out of the experiment that was in Oklahoma. What I don't understand, and I try to look everything as logically as I can, they say when this was enacted and people had to introduce their driver's license or form of I.D., and you put these nonprescription drugs behind the cage, they were able to close down 80% of the crack houses. My question is, why didn't they close down 100%? They said obviously because we don't know where 100% is. You can't come up with the 80% of closure if you never knew where the 100% were. So I don't know where they came up with 80%. I don't know what the real answer is. I do know at this point the cities are in violation of state law, that's an issue that is defined by fact of law. Is there a better way of doing this? It's going to be something that's going to be talked about, and I'm sure there's going to be additional Legislation.

Jose Cardenas:
Let's talk about what the democrats are going to be talking about. The speaker touched on some of the governor's issues, which I assume also priorities for the democratic legislature.

Phil Lopes:
I'd be happy to talk about those. But I do need to respond to the speaker. It would be humorous if it wasn't so scary, when people who talk about wanting small government are very willing to tell other government's state to cities what they ought and ought not to be doing, and that's exactly what we would be doing if we tried to punish cities for passing laws regarding meth. That's a dangerous direction for us to go, in my opinion. We democrats have several issues of focus for us. One is -- and the republicans are also supportive of this -- increased salaries for state employees. Our state employees haven't received more than a couple percentage points in salary increases since 1994. According to one study, we're 22% below market with our state employees. We need to fix that.
We will probably be proposing a faster increase or a faster mechanism to get to that 22% that we're low.

Jose Cardenas:
Faster than the republicans --

Phil Lopes:
That's correct. Another area that the speaker mentioned that is an emphasis of ours is English language learning, the Flores case.

Jose Cardenas:
I should mention I represent the defendants in that case, but go ahead.

Phil Lopes:
We want the courts to quickly and speedily resolve that issue, so we can make a decision about how much money we need to make that happen. The really embarrassing thing about this is going into 206, the first year when our children have to pass the aims test, we've got children who did not receive the benefit of decent English language learning instruction, not being able to pass the aims test. We need to fix that so that English language learners are adequately educated to speak English. So that's the second one. The third one is, the Phoenix medical school. We want that to continue on track. Not only does it contribute to solving the problem of the number of physicians, but it also can be a real economic development engine for Phoenix and the rest of the state. The fourth and last one that I will mention is all-day kindergarten. We've -- the legislature has said five years, we want to make sure and fund that for the third year and make sure that we invest in those young kids, those young people so that they can really get the benefit of education, and become productive citizens and good tax payers.

Jose Cardenas:
Is the rainy day fund another area of possible agreement between the democrats and the republicans?

Phil Lopes:
It is. And -- but my understanding is that we're going to fill that Rainy day fund, and we're still going to have somewhere in the area of $600 million of excess revenue. So what I mentioned in terms of salaries, E.L.L., Phoenix medical school, that money can be used to invest in those very worthwhile projects.

Jose Cardenas:
How different will this legislative session be because we're in an election year for the governorship?

Phil Lopes:
The major difference that I anticipate, I haven't been here long enough to make a real comparison here, but that I anticipate is that not only is it an election year, but we've got a governor that's extremely popular, and so far really only has token opposition. So a lot of what we do in the legislative session we anticipate is going to be aimed at that race. And we've also been told, and we find it easy to believe, that if the governor is going to be difficult to attack or to beat, then they're going to come after the legislature, and that's what we're preparing for.

Jose Cardenas:
Speaker, do you agree with that assessment, as to the impact of the election year?

Jim Weiers:
Well, it never changes. The second year is always going to be different from the first, simply by the nature it is election year, and you've been around long enough to know that. And it does change a little bit of the psyche within the participants. Do I see this year a little more important? It is important. Just because of illegal immigration, which is the number One issue. I don't care what poll you take, four or five years ago education was the top of everybody's list when it came to the importance of what they really truly wanted to see resolution, and find result to. Now it's illegal immigration. And it's not an easy issue. Like I said at the beginning of the program, almost everything we're talking about has something to do when it comes back into that issue.

Jose Cardenas:
But the suggestion that is -- is that the republicans will be sending proposals in many areas, including the illegal immigration, solely for the purpose of forcing the governor to weaken herself in the upcoming election. Is that --

Jim Weiers:
That doesn't make sense. First of all, if you send up something with the intent of nothing more than embarrassing the governor, you'd have to send up something that was embarrassing to the person presenting it. And I don't know any politician, republican or democrat that would be willing to say, I'm proposing something I think is stupid. When things do go up, remember, it's not the brainchild of a person; it is a collective group of the majority of the house and the senate. And so there's a number of people, and again, the vast majority of those people -- because the governor says I don't want to sign this because you're trying to embarrass me, I think the embarrassment, simply by saying that's the embarrassment --

Jose Cardenas:
The last session ended with hard feelings. Is there any carryover from that?

Jim Weiers:
I don't harbor resentment. There's a lot riding on every session that you go in. We're hired by the constituents to do the best job that we can. And as much as I disagree with many of the people down there, republican or democrat, and they agree with me, I think everybody truly believes that they want to do the best they can. And many times we want to get to the same point. The point of controversy is how we get there. And that's where the conversation starts, and that's where the arguments usually go forward. The governor was not forthright in what she said, and how she conducted herself within the negotiations. The republican caucus felt that we were not given the benefit of being completely honest with, as in the case with the rain aye day fund. The corporate tuition tax credits. The cardinals stadium, the federal funds, all these things were agreed upon, and --

Jose Cardenas:
Let me ask you, how are the democrats going to work with the republican majority in this legislative session?

Phil Lopes:
Well, it's going to be difficult, but the speaker knows that. Probably the thing that's going to be the most difficult and what I do still harbor some resentment also, but not towards the governor. The resentment -- from the last session that I harbor is the arrogance that I saw when the republicans did not -- were not at am interested in having any democrats involved in negotiating the budget.

Jose Cardenas:
Better or worse this session?

Phil Lopes:
I think it's probably going to be at least as bad.

Jose Cardenas:
We're going to end our discussion there. You all have a lot of work ahead of you. Best of luck and hopefully we'll have you back to talk about the results in a few months. Thank you very much.

Jim Weiers:
Thank you.

Jose Cardenas:
The Arizona attorney general, Terry Goddard, is taking on 42 major drug companies in a lawsuit filed earlier this month. The lawsuit charges the drug companies engaged in deceptive trade practices, causing the government and consumers to overpay. Producer Mike Sauceda tells us more.

Mike Sauceda:
17 states, including Arizona, have filed suits alleging the drug company's cheated consumers and Medicare out of millions of dollars by highly inflating prescription drug prices. Arizona suit includes 42 companies. Arizona attorney general Terry Goddard filed a suit on behalf of the state last week in an effort to recover damages and stop the drug companies from charging so much for drugs. Goddard says the problem isn't what drug companies charge insurers, like the Arizona Health Care Cost Containment System and Medicare, and what they charge Doctors and pharmacies. AHCCCS and Medicare pay the average wholesale price. In one case cited by Goddard, Abbott laboratories listed a price of $382 for an antibiotic, it charges just under $5 to doctors and pharmacies. That's a mark-up of over 7500%. Goddard says the pricing practices are a fraud. A rise in contact in companies with local offices in the lawsuit and received a response from the Merck company, a company spokesman says we have not been served with a copy of the complaint nor have we had an opportunity to review the complaint so it would be inappropriate to comment. Merck is confident its pricing practices are entirely consistent with all applicable law and regulations.

Jose Cardenas:
"Horizon" contacted several other pharmaceutical companies named in the lawsuit, but none offered toe a response. With us now with more details of the lawsuit, Arizona Attorney General Terry Goddard. Welcome come to "Horizon" again.

Terry Goddard:
Thank you very much.

Jose Cardenas:
I should mention my law firm represents some drug companies. Explain the -- what's going on with the average wholesale price. The assumption would be if it's wholesale it's a bargain.

Terry Goddard:
It's cheap, wouldn't you think that? A lot of drug reimbursement policy for Medicare primarily, but also for many of the insurance companies. It's based upon something called average wholesale price there. Are independent companies out there that publish every year a directory of 65,000 different drugs that establish the average wholesale price for reimbursement purposes? Now, they don't research that price, they make it very clear. They take what the drug companies tell them. And what the drug companies tell them in some instances are extraordinarily high based on what's actually being charged to doctors in their offices for certain types of drugs that are administered in the office, and some of the discounts that are given to pharmacies. Here's where the rip off comes. Essentially drug company x sells a particular drug to a doctor, let me emphasize, this isn't all doctors, just ones that do certain work within their -- very serious disease that's are treated in the doctor's office. And they are subject to what we call Medicare Part B reimbursement. They --

Jose Cardenas:
What kind of diseases --

Terry Goddard:
The general ones are organ transplants, chemotherapy or other cancer treatments, and some respiratory treatments.

Jose Cardenas:
So these would be drugs prescribed as follow-up to those kinds of procedures?

Terry Goddard:
That's right. They would be followed up for those types of areas, and they would be administered specifically in the doctor's office. And in those cases, we found very deep discounts that were being charged by the drug companies to the doctor. The doctor then passed those -- the -- essentially charged the patient, but because the patient was paid by Medicare, it ended up being a charge to Medicare based upon the A.W.P., not based upon what price was actually paid.

Jose Cardenas:
Do you have the same situation with pharmacies?

Terry Goddard:
You have the same situation with pharmacies if it's a Medicare reimbursement or an insurance company reimbursement. So you pay a co pay, based in many cases on a percentage of the actual A.W.P. of the drug. We found in a lot of cases the discounted cost of the pharmacy meant that the co pay from the individual patient was higher than the -- just the co pay was higher than the pharmacy was paying for the drug. Pharmacy is then reimbursed based upon the A.W.P. so let me gist give you a hypothetical example. The A.W.P. is at 100. The drug is sold to the pharmacy for $5. The patient now comes in and pays a percentage of $100, say $10, 10%, usually it's 20%, so they pay $20. They've already paid the pharmacy significantly more than they actually paid for the drug. The pharmacy turns around and gets a reimbursement based on 95% or 80%, depending on the type of drug, of the A.W.P. so they pocket at least $80 for something that they paid $5 for. That is not unusual. Many of the drug companies that we charged here are in that percentage overcharging.

Jose Cardenas:
Is there any prospect for suits against physician and Pharmacies?

Terry Goddard:
We're not done, but focus of this lawsuit is 42 individual drug companies, because what they're doing, although the drug companies is very clever in a way, you and me as taxpayers are the ones being ripped off, because Medicare is paying way too much to these doctors to these pharmacies. But what the drug companies do, although they apparently -- you look at it on the face of it, they're not getting -- the money is not coming to them. But they're able to get their market share protected or increased based upon what A.W.P. they post. And so in some cases, they have a drug they want to protect, they want to make sure the doctors are likely to prescribe that drug, so they make a very high A.W.P., give a very deep discount to the doctor, and they increase the chances that it's going to continue to have a major market share.

Jose Cardenas:
Similar lawsuits have been filed elsewhere. What's been the success rate there?

Terry Goddard:
Similar lawsuits are primarily in discovery, as ours will be very shortly as soon as it's been served. So they're still finding out what the situation is and getting all the facts in order before trial. There's one in trial in West Virginia to a single defendant, and that we should have result on fairly soon. And a few of these cases have been settled. But generally I think it's an outrage for consumers, and for the federal government. They've been ripped off for years, and this is something we're trying to get a change in proper, and we're trying to get actual damages to go back to the individual groups that have been seriously damaged.

Jose Cardenas:
We'll have to wrap it up with that. Thank you so much for appearing on "Horizon." British Petroleum's chief executive, Lord John Browne, presented the keynote address at today's Arizona State University event. His topic, long-term sustainability through energy production. Merry Lucero spoke with him about advances in sustainable energy and his impressions of Arizona.

Merry Lucero:
Thank you for speaking with us today. What are your impressions of Arizona, and your messages today to Arizona State University graduates?

Lord John Browne:
This is not the first time I've been to Arizona. It's flourishing state, with extraordinary people and great leadership. As in the state university, I think it's an extraordinary American university. One, which has a strong commitment to something that I'm also committed to, which is trying to work out how to make the world a sustainable place. It's also doing some extraordinary things in interdisciplinary studies, notably a combination of biology and computing science, and other physical sciences. This is going to lead I believe to some great advances.

Merry Lucero:
B.P., is that British Petroleum, or Beyond Petroleum?

Lord John Browne:
It's neither British Petroleum nor Beyond Petroleum. It's B.P. but beyond petroleum describe as way of thinking, which I hope we demonstrate in the way in which we do things beyond the status quo. Alternative energy, which is really beyond petroleum, as well as activities to do with the way in which we think about our business and the sustainable way.

Merry Lucero:
We are so deeply rooted in our car culture here, and the way we commute. How do we start to steer away from our dependency on gasoline, and the culture that we've created for ourselves?

Lord John Browne:
It would be very easy for me to say, let's come on now, get more frugal. Become thrifty, become to conserve. But actually it's a tough thing just to say to people and to get them to do that without setting an example and without giving people alternative choices. So I always say to myself, it's best to give people more choices rather than to give them one choice and take it away. So all mass transportation would certainly help, offering smaller cars that really do perform very well and that people feel secure in would be very good. Offering them gasoline as we're doing in the future, which make them go faster and go farther for less gasoline. So a lot of things combined. I suppose in the end we'd like to for everyone in the world to look at energy and say, it's scarce. Be frugal, be careful, and be responsible. But equally balance that with your lifestyle. I'm all in favor of people being very careful in consuming the product that B.P. makes. Consume less and do it wisely.

Merry Lucero:
And that is the challenge. Balance can with lifestyle.

Lord John Browne:
That's always the challenge, and I guess that's a challenge for a graduate of the university or anything, is, go and do something, but make sure you balance all the things you do, your life, your work, the thoughts of the world, so you can be sensible and wise.

Merry Lucero:
Lord John Browne, thank you very much for speaking with us today.

Lord John Browne:
Pleasure.

Announcer:
Former Phoenix mayor decides to run for statewide office next year. He wants to be Secretary of State. And it looks like voters will decide if high-rises along camelback road can be built. Opponents gathered enough signatures to put that on the ballot. The funeral -- the Journalists' Round Table Friday at 7:00 on Channel 8's "Horizon" program.

Jose Cardenas:
The Thursday edition of "Horizon," stay tuned for "Horizonte," I'll be talking to County Attorney Andrew Thomas, and about some special Hispanic Christmas traditions. Thanks. Enjoy your evening.