Attorney General Tom Miller has sued 78 drug companies today, alleging that they unlawfully inflated drug costs to increase reimbursements made by the Iowa Medicaid program from 1992 to 2005. During that time, the Iowa Medicaid program spent more than $1.6 billion for the companies’ drugs.

The 167-page complaint, filed in the U.S. District Court for the Southern District of Iowa, claims that drug companies fraudulently reported the average wholesale price of prescription drugs and other price indicators, sometimes overstating the price by more than 200 percent of the true price. In one case, GlaxoSmithKline reported an average wholesale price for Zantac (25 mg/ml vial) of $39.90, but the same drug was sold to retail pharmacists for $9.80, a 307 percent difference.

This is an extreme example, Miller said. “But it gives you the idea that the price reported was not what should have been reported.”

The suit claims that Iowa spent millions of dollars more for prescription drugs than it would have if they had been priced accurately and seeks to recover the money lost.

Miller further alleged that manufacturers were trying to create a greater spread between the average wholesale price reported and the price actually said by pharmacies in order to increase market share for their products.

“They compete to charge us more as consumers,” Miller said.

Iowa joins several other states that have brought similar lawsuits. Texas recovered $55.1 million in its case so far. Miller said several states could consolidate into one suit against the companies.

Iowa is working with New York City law firm of Kirby McInerney LLP because of its experience and specialized expertise in this area of law.