medication. And since 1991 the Medicaid Rebate Statute has required pharmaceutical manufacturers to pay rebates to Medicaid for "covered outpatient drugs." The formula for the rebate is admittedly complex. However, companies that fail to calculate and pay correct rebates under this statute can face liability not only under the Medicaid Rebate Statute, but also under the federal False Claims Act as well as state false claims acts. More broadly, the False Claims Act is the basis for action whenever faulty pricing data are reported by manufacturers, on the grounds that price concessions, rebates, discounts or other negotiated payments that are not reported properly can skew the calculation, thereby leading to inflated payments. Also, if a manufacturer provides discounts to a hospital or another healthcare facility to encourage off-label use of a drug, and that use is reimbursed by the government, such off-label promotion may be penalized as a violation. In sum, because of the increased use of medical products and the dramatically rising cost of healthcare, it was inevitable that the government would explore all avenues through which it could curb its healthcare expenditures, seeking to apply laws not previously used against the medical products industries. These laws would ensure that: • companies correctly disclose the prices of their products; • manufacturers make no claims that would entice physicians to prescribe drugs for off-label uses and thereby promote product overutilization; • manufacturers promote their products in ways that would not provide inappropriate incentives for physicians to prescribe products ultimately paid for by the taxpayer.
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