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For Immediate Release
January 8, 2004
Media Contact: 410-576-6357

CURRAN APPLAUDS FEDERAL ACTION REQUIRING PHARMACEUTICAL MANUFACTURERS TO RETAIN DRUG PRICING INFORMATION FOR 10 YEARS

Attorney General J. Joseph Curran, Jr. announced today that he was pleased that the federal Center for Medicare and Medicaid Services (CMS) has rescinded a rule that would have allowed pharmaceutical companies to destroy crucial drug pricing information after holding it for only three years. Notice of the action, published Tuesday in the Federal Register, will require manufacturers to retain the records for 10 years. The action was taken following a protest by Attorneys General from 46 states, including Attorney General Curran.

"Allowing these companies to destroy drug pricing information after three years would hamper our efforts to obtain drugs for the Medical Assistance Program at the best possible prices. I am pleased that the federal agency involved acknowledged the concerns raised by the states," Curran said.

On August 29, 2003, the CMS–the government entity that regulates Medicaid and Medicare program–announced a new rule, to have taken effect January 1, 2004, that would have permitted pharmaceutical manufacturers to destroy records and data used to calculate average manufacturer drug prices and best prices for government purchasers of drugs three years after the manufacturer reports the data. Attorney General Curran and the other Attorneys General signed on to a letter sent by Massachusetts Attorney General Tom Reilly on October 28, 2003 to Health and Human Services Secretary Tommy Thompson and CMS Administrator Thomas A. Scully, that cautioned that the three-year rule could interfere with ongoing state litigation and investigations into drug pricing practices that have allegedly defrauded Medicaid programs.

Explaining the reasons for rescinding the three-year rule, Secretary Thompson said that a 10-year rule was necessary because "the way the drug rebate program operates, and the complexity of drug pricing, the program is potentially more susceptible to continuing errors, fraud, or abuse." The 10-year standard was imposed, Secretary Thompson said, to assure that document destruction would "not hinder the activities of Federal and State law enforcement officials."

Federal law enforcement agencies and many state Attorneys General have ongoing civil and criminal investigations involving alleged violations of Medicaid Rebate statutes, federal and state anti-kickback statutes and false claims laws. Numerous cases have been filed under seal throughout the country under federal and state anti-kickback and false claims statutes. The preliminary investigation of these cases typically takes place without notice to the manufacturers.

" Requiring these companies to retain drug pricing information for ten years will help in the fight to keep drug prices at reasonable levels and Medical Assistance costs under control," Curran said.

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