Health Care & Reproductive Rights

LOS ANGELES--Attorney General Edmund G. Brown Jr. today announced that California will receive $23 million of a $515 million nationwide settlement with Bristol-Myers Squibb. The settlement resolves allegations that the company reported “grossly inflated” drug wholesale prices to California’s Medicaid program in an effort to maintain its market share of prescription drugs.

“The Medi-Cal system requires companies to accurately report drug prices to the state,” Attorney General Brown said. “Bristol Myers-Squibb grossly inflated its reported drug prices and then used the artificially high price to increase its market share. The Bureau of Medi-Cal Fraud and Elder Abuse will continue to investigate and prosecute any alleged fraudulent conduct by any health care provider whose services or products are paid for by Medi-Cal,” Brown added.

The settlement agreement follows a drug-price investigation into Bristol Myers-Squibb and former subsidiary Apothecon that was launched in 2001 by California, the federal government, and other state attorneys general. The investigation was triggered by various whistle blower lawsuits filed around the United States. During the inquiry, Bristol Myers-Squibb voluntarily disclosed potential violations of state and federal anti-kick back law.

California found evidence of violations including: reporting artificially high average wholesale prices for prescription drugs to shut out competitors, organizing kickback schemes to lure pharmacies and wholesalers, illegally marketing an adult anti-psychotic drug as a treatment for children, and hiding the lowest sale price for Serzone to underpay Medicaid. Details of those allegations include:

* Reporting inflated average wholesale prices for physician-administered drugs:

The average wholesale prices for drugs were substantially higher than the prices for which the company sold these products, a scheme designed to maintain market share in the face of competing generic alternative drugs. The company’s sales force would “market the spread” or sell drugs based on the profit margin between the reported average price, which is the basis for Medicare and Medicaid reimbursement, and the actual costs for the same drugs, which were dramatically less than the reported price.

Medi-Cal, which is California’s Medicaid program, reimburses pharmacies and doctors based on prices reported by pharmaceutical manufacturers whose drugs are dispensed to beneficiaries. Because government health insurance programs such as Medi-Cal rely on reported prices to set reimbursement amounts, the company’s conduct caused the state to overpay for drugs.

* Engaging in an array of kickback activities to enhance their market share:

The investigation revealed that Apothecon paid millions of dollars to lure pharmacies and wholesalers to switch from competitors’ generic drugs to the company’s generic products. The payments to doctors included physician consulting programs consisting of trips to luxury resorts, meals at expensive restaurants, and tickets to sports events where doctors allegedly listened to pharmaceutical sales pitches. The kickback schemes targeted payments to doctors to keep generic competitors out of the market.

* Illegally marketing its atypical antipsychotic drug Abilify:

The Food and Drug Administration approved Abilify in November 2002 for the treatment of adult schizophrenia and later for adult bi-polar disorder. The investigation revealed that the company promoted the drug for treatment of children and dementia-related psychosis when neither use was approved by the FDA. This off-label promotion scheme increased the company’s sales between 2002 and 2005.

* Concealing its best price to the U.S. Centers for Medicare and Medicaid Management:

Bristol Myers-Squibb allegedly concealed its best price from the federal Centers for Medicare and Medicaid Management in a private-labeling scheme for its drug Serzone. The federal government uses best price to determine the amount of Medicaid rebates owed to states. The company allegedly affixed Kaiser labels to its Serzone and shipped the drugs at a lower price than was sold to any other customer. The company did not include this low price in its calculations reported to the federal government for Medicaid rebate purposes, thereby underpaying rebates owed to California.

The $23 million settlement with Bristol-Myers Squibb will pay approximately $12 million in full restitution to Medi-Cal and $11 million for the state’s False Claims Fund. The state’s lawsuit was filed in San Diego Superior Court in 2003 and then removed to the federal central district court in Los Angeles. Later it was consolidated with a number of other state lawsuits in federal court in Boston.

To date, California has reached settlements worth $9.7 million with five other companies, and their corporate parents, resolving similar allegations. Claims against fifteen companies are still pending.

For copies of the state's settlement and original lawsuit please contact the Attorney General's Press Office at 916-324-5500.

SACRAMENTO - California Attorney General Edmund G. Brown Jr. today joined ten states in announcing that Anheuser-Busch will discontinue its popular alcoholic energy drinks, including Tilt and Bud Extra, and will not produce any caffeinated alcohol beverages in the future.

“Anheuser-Busch, the largest brewing company in the United States, has taken an important action to protect young people from attractive alcohol advertising and marketing,” Attorney General Brown said. “Other major alcohol manufacturers should follow Anheuser-Busch’s lead and eliminate dangerous combinations of caffeine and alcohol from the marketplace.”

Alcoholic energy drinks are prepackaged beverages that combine alcohol and caffeine, guarana, taurine, ginseng and other ingredients associated with non-alcoholic energy drinks. Brown asserts that Anheuser-Busch marketed Bud Extra and Tilt in violation of state consumer protection statues by:

• Making misleading health-related statements about allegedly energizing effects of Bud Extra including increased strength and increased ability to stay up all night after drinking the products
• Failing to disclose its effects on consumers, and ignoring potential consequences of drinking alcoholic beverages that are combined with caffeine or other stimulants
• Directing advertisements of Tilt and Bud Extra to consumers under the age of 21

In November 2007, researchers at Wake Forest University of Medicine found that the combination of caffeine and alcohol sends mixed signals to the nervous system, causing the effect of a “wide awake drunk.” Students who consumed these energy drink cocktails were twice as likely to be involved in alcohol-related accidents and injuries than when drinking alcohol alone. The combination of alcohol and caffeine can be dangerous because individuals may not feel impaired even when blood alcohol levels are very high.

California, along with ten other states, asserted that Anheuser-Busch made misleading health-related statements about the energizing effects of its caffeinated alcohol beverages. Marketing that promoted the alleged energy component of the drinks made the drinks appealing to teens. The company advertised Bud Extra with taglines such as “You can sleep when you’re 30” and “Say hello to a night of fun” and utilized MySpace, YouTube, and other Internet sites popular with underage youth.

In addition, the packaging for many of the alcoholic energy drinks was similar to that for non-alcoholic energy drinks, leading to retailer and parent confusion.

Anheuser-Busch cooperated during the investigation and agreed to reformulate its products to exclude caffeine. As part of the agreement, Anheuser-Busch will discontinue two of its popular alcoholic energy drinks, Tilt and Bud Extra, and will not produce any caffeinated alcohol beverages in the future. Under the agreement the company will:

• Stop manufacturing and marketing all caffeinated alcoholic beverages, including Bud Extra and Tilt as currently formulated
• Reformulate its alcoholic energy drinks so that they do not contain caffeine or other stimulants that are metabolized as caffeine, such as Guarana
• Eliminate all references in advertising to caffeinated formulations and remove any reference to using Bud Extra and Tilt as mixers for other drinks.

Anheuser-Busch also agrees to immediately discontinue the current Tilt website www.tiltthenight.com without hyper linking or directing visitors to a new site. Any new Website may only to promote the reformulated Tilt without caffeine.

Other states which joined California in reaching an agreement with Anheuser-Busch include: Arizona, Connecticut, Idaho, Illinois, Iowa, Maine, Maryland, New Mexico, New York and Ohio. A copy of the multi-state agreement is attached.

For more information designed to help educate parents and the general public about alcoholic energy drinks please visit the Attorney General's Crime and Violence Prevention Center at: http://www.safestate.org/index.cfm?navId=1375

LOS ANGELES--California Attorney General Edmund G. Brown Jr. today announced a plan to create an online prescription drug database so that authorized doctors and pharmacies can stop drug dealers and addicts who collect dangerous narcotics from multiple doctors.

“Every year thousands of doctors try to check their patient’s prescription history information but California’s current database is difficult to access,” Attorney General Brown told a news conference. “If California puts this information online, with real-time access, it will give authorized doctors and pharmacies the technology they need to fight prescription drug abuse which is burdening our healthcare system.”

Brown is working with the Troy and Alana Pack Foundation--founded by Bob Pack whose 7 and 10 year-old children were killed by a driver under the influence of prescription drugs obtained from multiple doctors--to enhance California’s current prescription database by providing real-time Internet access for law enforcement and medical personnel.

Since 1940, the California Department of Justice has maintained a state database of dispensed prescription drugs with a high potential for misuse. Today, this prescription information is stored in the state’s Controlled Substance Utilization Review and Evaluation System or CURES, which contains 86 million schedule II, III and IV prescriptions dispensed in California. Examples of drugs that are tracked in the state’s database include Morphine, Vicodin, Oxycodone, Codeine, amphetamine, and analogs of methadone and opium.

The attorney general currently receives more than 60,000 requests annually from authorized doctors and pharmacies for patient prescription history information. Such requests are currently processed within several days by fax or telephone which makes it difficult for doctors and pharmacists to quickly review a patient’s prescription history before dispensing another controlled drug.

California’s new online CURES system will make it much easier for authorized individuals to quickly review prescription information to help prevent “doctor shopping,” or gathering large quantities of prescription medications by visiting multiple doctors. The new online database, which the state is preparing to launch in 2009, is expected to cost $3.5 million over the next three years.

The new CURES program will give doctors and pharmacists the technology they need to monitor the prescribing and dispensing of controlled medications. Attorney General Brown said that if doctors and pharmacies have real-time access to prescription history information, it will help them make better prescribing decisions and cut down on prescription drug abuse in California.

“If doctors can easily check their own patients’ prescription history, it will reduce the number of people who are able to obtain large quantities of narcotics from many different physicians,” Brown said.

According to the Drug Abuse Warning Network, there were 598,000 emergency room visits involving non-medical use of prescription or other pharmaceutical drugs in 2005. 55% of these visits involved multiple drugs.

In 2005, Senator Tom Torlakson and the Troy and Alana Pack Foundation authored Senate Bill 734 which authorized new tamper-resistant prescription pads and permitted online access to the CURES system, pending the acquisition of private funding. The Troy and Alana Pack Foundation is working with Kaiser Permanente, The California State Board of Pharmacy and the California Attorney General’s Office to develop the new database.

“As a pioneer in the development of online medical information, Kaiser Permanente is proud to have contributed to the feasibility study and development of the database,” said Kaiser Permanente Pharmacy Operations Professional Affairs Leader Steven W. Gray. “With the aid of this database, physicians and pharmacists will have valuable patient history information readily available to make the best and safest patient care decisions.”

Virginia Herold, executive officer of the California State Board of Pharmacy said: 'The California State Board of Pharmacy has long been a strong supporter of the CURES system. This new system will reduce drug diversion from pharmacies--it is an important enhancement to patient care and law enforcement.'

Kentucky was the first state to put all its prescription history information online for authorized doctors, pharmacists and law enforcement. California’s new database will be the largest online prescription drug database in the United States.

A Frequently Asked Questions document is attached. For more information on the California Department of Justice Bureau of Narcotic Enforcement and California’s current prescription drug monitoring system visit: http://ag.ca.gov/bne/trips.php

SAN DIEGO--California Attorney General Edmund G. Brown Jr. today announced a “groundbreaking settlement” with Merck & Co. which requires the pharmaceutical manufacturer to obtain Federal Drug Administration approval before running any television drug advertisements for new pain medications.

“Merck’s aggressive television advertising convinced hundreds of thousands of consumers to seek Vioxx prescriptions before the drug’s risk were fully understood,” Attorney General Brown said. “Today’s groundbreaking settlement prevents Merck from releasing new television drug advertisements without obtaining federal approval.”

Today’s settlement resolves 30 state lawsuits challenging Merck’s marketing practices for Vioxx, a non-sterodial anti-inflammatory drug used to treat symptoms of arthritis as well as chronic and acute pain.

In 1999 Merck launched an aggressive promotional campaign directed at both consumers and health care professionals in which the company allegedly misrepresented the cardiovascular dangers of Vioxx. In 2004, Merck admitted that Vioxx caused serious cardiovascular adverse events and withdrew the drug from the market.

California alleged that one of the problems with the Vioxx marketing campaign was that the direct to consumer advertising began when the drug was first released and before doctors had an opportunity to gain experience with the drug and its potential side effects. Under today’s settlement, Merck may not launch a television advertising campaign for a newly approved pain drug if the Federal Drug Administration recommends delaying such television advertising.

The settlement, which also requires Merck to pay $58 million in restitution to states, is the largest monetary settlement that a group of states have obtained in a pharmaceutical advertising case. California will receive $5.3 million of the settlement funds to pay attorneys’ fees, future enforcement and consumer education.

The settlement places other restrictions on Merck’s future conduct including:

• Prohibiting the use of deceptive scientific data when marketing new drugs to doctors
• Prohibiting Merck from “ghost writing” articles and studies for publication
• Requiring disclosure of conflicts of interest when Merck promotional speakers make presentations at supposedly independent Continuing Medical Education programs
• Requiring Merck to submit clinical trial results of FDA-approved Merck products to the National Library of Medicine

Merck’s principle place of business is One Merck Drive, Whitehouse Station, New Jersey. Merck advertised, sold, promoted and distributed the prescription drug rofecoxib, marketed under the name Vioxx, in California and nationwide.

Other states which participated in today’s settlement include: Arizona, Arkansas, Connecticut, Florida, District of Columbia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Washington, and Wisconsin..

Please contact the attorney general's press office for a copy of the complaint and settlement

NOTE TO EDITORS: Dr. Wesley Albert was booked this morning on second degree murder for violating Penal Code Section 187(a). Our earlier report of a PC 192(a) involuntary manslaughter charge was incorrect.

RIVERSIDE--Following a ten-month investigation, California Department of Justice special agents today arrested Dr. Wesley Albert, 78, in Lake Elsinore for writing large quantities of prescription drugs which led to an individual's death in Riverside last year.

“Prescription drugs are extremely potent, even lethal,” Attorney General Edmund G. Brown Jr. said “The California Department of Justice will crack down on crooked doctors who sell dangerous narcotics to people without a legitimate medical condition,” Brown added.

The California Department of Justice opened its investigation into Dr. Albert’s medical practice after a former patient was arrested in Encinitas in April 2007 for possessing controlled prescription drugs. Undercover agents discovered that Dr. Albert was running a prescription mill from his room at the Lake Elsinore Casino and Hotel in which he churned out hundreds of prescriptions for dangerous narcotics including Vicodin, Xanax, Soma and Oxycontin.

Dr. Albert routinely prescribed more than 5 times the normal quantity of these drugs, sometimes up to 500 pills per person per month, and pocketed between $50 and $100 cash per prescription.

In November, Jason Morgan, 28, a resident of Riverside, died after Dr. Albert gave him large prescriptions for Soma, also known as Carisoprodol, which is a centrally acting skeletal muscle relaxant prescribed for treatment of acute, musculoskeletal pain. Investigators found Jason Morgan with 30 bottles of narcotics that Dr. Albert had prescribed.

Early this morning, special agents arrested Dr. Albert at his residence at the 18000 block of Applewood Way in Lake Elsinore, California. Agents charged Dr. Albert with second degree murder, Penal Code Section 187(a), for prescribing medication without pathology. He was booked into Riverside County Jail in Murrieta. Bail is set for $2 million.

Dr. Albert is expected to be arraigned on Friday at 1:00 p.m. in the Riverside County Superior Court. The Riverside County District Attorney’s Office will prosecute the case.

The San Diego Pharmaceutical Narcotic Enforcement Team, often referred to as RxNet, led the investigation which resulted in today’s arrest. RxNet, part of the California Department of Justice Bureau of Narcotic Enforcement, conducts investigations into forged, altered, and fraudulent prescriptions, and the illegal and illicit diversion of pharmaceutical controlled substances.

Other agencies which assisted during the investigation include the Riverside County District Attorney's Office and the Drug Enforcement Agency.

For more information on the California Attorney General's Bureau of Narcotic Enforcement visit: http://ag.ca.gov/bne/

LOS ANGELES--California Attorney General Edmund G. Brown Jr. today announced the arrest of two physicians, three clinic administrators, and eleven assistants for luring pregnant women to a fake health clinic that fraudulently billed the state’s Medi-Cal program for at least $2 million.

“The Medi-Cal program is a vital medical program for the most vulnerable Californians--I won’t tolerate rip offs from this program by doctors or anyone else,” Attorney General Brown said.

The suspects hired recruiters, known as cappers, to solicit pregnant women walking in the street outside the clinic. The cappers enticed women to visit the clinic by offering approximately $30 or free baby merchandise or the promise of certain medical services. Recruiters were paid $100, under the table, for every pregnant woman they could convince to visit the clinic.

The clinic targeted pregnant women so that it could enroll them in a special presumptive eligibility Medi-Cal program, designed for low income Californians who do not have health insurance for prenatal care. Clinic staff enrolled the women in this program, thereby allowing doctors to immediately bill the state at a higher rate for temporary prenatal health benefits.

Women who visited the clinic were instructed not to use their real names or dates of birth on the patient intake forms given to them by the clinic’s personnel.

During the clinic visits, patients received unnecessary services like pregnancy tests or unnecessary blood tests. Solicitors then told patients that if they wanted additional cash or gifts they could return to the clinic and re-enroll using a different name and date of birth. Under this scheme, the clinic maintained a steady source of people to generate false Medi-Cal claims.

The clinic billed Medi-Cal $400-$500 per pregnant patient for a wide array of prenatal services that were generally not provided. For example, the clinic would conduct unnecessary blood tests, a scam which ripped off an additional $100-$200 from the Medi-Cal program.

The defendants arrested today at the Downtown M Medical Clinic on Wilshire Boulevard and elsewhere include: the clinic’s owner Dr. Peter Shrier, the office manager Ella Rozenberg, Ella’s husband Arkady Rozenberg, Dr. Anna Gravich, a physician who helped falsify medical records, and Anna’s husband, Gersha Gravich, who helped run the clinic. The others arrested were sidewalk solicitors who recruited the patients. The activities at the clinic remain under investigation.

Shrier, the Rozenbergs and the Graviches are charged with violating Penal Code sections 487(a) & 12022.6(a)(3), theft of more than $1.3 million, and violating Welfare and Institutions Code section 14107, presenting false Medi-Cal claims. The solicitors are charged with violating Welfare and Institutions Code section 14107.2, paying for Medi-Cal referrals.

The Department of Justice launched an investigation into the clinic after a former employee tipped off the department after being fired for questioning suspicious billing practices. During the investigation, special agents interviewed witnesses and reviewed key Medi-Cal and bank records. The case will be prosecuted by the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse.

Other law enforcement personnel that assisted the Bureau of Medi-Cal Fraud and Elder Abuse during today’s arrest include the following: the U.S. Department of Health and Human Services Office of the Inspector General, the Federal Bureau of Investigation, Los Angeles Sheriff’s Major Crimes Bureau, Department of Homeland Security and the Internal Revenue Service.

The Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse investigates and prosecutes those who file fraudulent claims for medical services, medical equipment and drugs.

Medi Cal is a government program that pays for essential medical services for California’s qualifying poor. It is funded by the state and federal governments and administered by the California Department of Health Care Services.

Suspect Information:

Peter Reuben Shrier
Recommended Bail: $500,000
DOB: 05/14/41
Sex: M Race: W Hair: Brn Eyes: Brn Ht: 5'10' Wt: 200
Residence: 4738 Tobias Ave. Sherman Oaks, CA 91403
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057

Arkady Rozenberg
Recommended Bail: $500,000
DOB: 05/30/50
Sex: M Race: W Hair: Brn Eyes: Brn Ht: 6'01' Wt: 215
Residence: 2309 Apollo Dr. Los Angeles, CA 90046
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057

Ella Rozenberg
Recommended Bail: $500,000
DOB: 12/24/52
Sex: F Race: W Hair: Bln Eyes: Grn Ht: 5'06' Wt: 175
Residence: 2309 Apollo Dr. Los Angeles, CA 90046
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057

Gersha Gravich
Recommended Bail: $500,000
DOB: 10/26/47
Sex: M Race: W Hair: Brn Eyes: Brn Ht: 5'10' Wt: 220
Residence: 2515 Apollo Dr. Los Angeles, CA 90046
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057
Aliases: Gregory Gravich

Anna Gravich
Recommended Bail: $500,000
DOB: 01/08/48
Sex: F Race: W Hair: Bln Eyes: Grn Ht: 5'03' Wt: 170
Residence: 2515 Apollo Dr. Los Angeles, CA 90046
Business: 2500 Wilshire Blvd, Suite 100 Los Angeles, CA 90057
Aliases: Ana Gravich

The suspects are being held in Los Angeles County Jail, awaiting arraignment and bail review later this week. The case will be prosecuted by the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse.

The investigation into this case is ongoing.

The criminal complaint is attached.

LOS ANGELES—California Attorney General Edmund G. Brown Jr. today settled an antitrust lawsuit that charged Barr Pharmaceuticals with taking $20 million for keeping off the market a cheaper, generic version of the oral contraceptive Ovcon.

“Barr illegally kept its generic drug off the market in exchange for $20 million from Warner Chilcott, thereby keeping drug prices higher,” Attorney General Brown said. “Today’s agreement ensures that these pharmaceutical companies will not collude to keep affordable medications away from consumers,” Brown added.

In 2005, California and thirty-three other states and the District of Columbia sued Barr Pharmaceuticals and Warner Chilcott for entering into an illegal arrangement by which Barr agreed not to sell generic Ovcon for five years in exchange for $20 million. The states’ alleged that the agreement violated state and federal antitrust laws and artificially inflated the price of Ovcon.

Non-competition agreements, as well as pharmaceutical industry practices including efforts to steer consumers to more costly medications, have increased the average retail price of prescription medications 8.3% annually, triple the rate of inflation.

In 2003, Warner Chilcott made approximately $61 million from sales of brand name Ovcon. In 2005, the company reported a 16% increase in annual revenue from Ovcon sales.

After the states filed their lawsuit Warner Chilcott voided its agreement with Barr, opening the door to competition between the two companies. Within one month of restoring competition in late 2006, the Ovcon price dropped 18%, from $39 to $32. As of May 2007, Ovcon prices were down to $20, a total drop of nearly 50%.

Under today’s settlement, Barr will not enter into non-competition agreements with companies that sell brand name drugs. In addition, a ten-year consent decree with California requires Barr to provide the state with copies of any future related agreements. Without the consent decree such agreements have traditionally been kept secret between the companies. Barr will also pay California approximately $500,000 in statutory penalties and attorneys fees.

Previously, California reached a similar settlement with Warner Chilcott, which bars the company from entering non-competitive agreements with generic drug manufacturers.

Americans spent $275 billion on prescription drugs in 2006, expenditures which will grow about 8% per year. Between 1994 and 2005, the total volume of drugs prescribed grew 71% according to a Kaiser Family Foundation analysis.

The multi-state settlement agreement is attached.

SAN DIEGO--California Attorney General Edmund G. Brown Jr. today announced a multi-million dollar settlement with Caremark, resolving allegations that the prescription management company tricked doctors into switching
patients to different brand name drugs in exchange for “secret rebates from drug manufacturers.”

“Caremark received secret rebates from drug manufacturers in exchange for convincing doctors to switch patients to different brand name drugs,” Attorney General Brown said. “Under today’s settlement, the company must disclose the payments it receives for recommending certain drugs.”

Caremark provides prescription drug services to approximately 2,000 health care plans nationwide. California alleged that Caremark engaged in deceptive business practices by convincing doctors to switch patients to different brand name drugs in exchange for secret rebates from pharmaceutical companies.

Health plans were financially harmed by these practices and some patients were forced to pay higher co-payments for the new drugs that they received. Under today’s settlement, Caremark must reimburse patients for any out-of-pocket expenses related to drug changes and inform patients if switching drugs will increase co-payments.

Caremark must also inform physicians of the company’s financial incentives for making certain recommendations and must inform physicians if sales presentations are funded by pharmaceutical manufacturers. Caremark is barred from promoting a drug switch if the new drug exceeds the cost of the originally prescribed medication.

Under today’s settlement, Caremark will pay $38.5 million to 29 states for costs of litigation and programs to benefit patients. $22 million of this amount is a cy pres payment which will fund a prescription medication program for low income, disabled or elderly consumers and a program to educate consumers about important differences between similar medications. Caremark will pay up to an additional $2.5 million in reimbursements to patients who paid extra because they were switched from one cholesterol-controlling drug to another.

California will receive approximately $3.4 million for charitable organizations that provide elderly and low income people with free prescription medications.

Maryland and Illinois led the investigation into Caremark’s drug switching practices. Twenty-eight other states participating in today’s settlement include: Arizona, Arkansas, Connecticut, Delaware, District of Columbia, Florida, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia and Washington.

In 2006, Caremark’s net revenues were $36.8 billion, making it one of the nation’s largest pharmacy benefit management companies. Caremark also administers mail order pharmacies, which sold 516 million prescriptions to patients in 2006.

The complaint and the agreement are available at www.ag.ca.gov/newsalerts

LOS ANGELES – California Attorney General Edmund G. Brown Jr. today announced the arrest of four suspects involved in a $1.5 million “fake healthcare clinic” scam. The suspects created a health clinic and recruited people to undergo unnecessary medical tests, with the sole purpose of filing false claims with Medi-Cal and Medicare.

Commenting on the arrests, Attorney General Brown said, “The suspects create a fake healthcare clinic to line their own pockets rather than help the sick and elderly. These arrests send a strong message that this kind of rip-off will not be tolerated.”

The 4 defendants, arrested yesterday morning at various locations in Los Angeles County, are: Richard Melkonyan, Akop Melkonian, Lilit Baghdasaryan, and Dr. Rito Castanon-Hill. Dr. Neil Hollander has agreed to surrender next week. David James Garrison remains at large.

The suspects operated Scott Medical Center in Burbank and hired two physicians, Dr. Hollander and Dr. Castanon-Hill, to create a front for a physician assistant who falsified records and billed for procedures not actually performed. The suspects recruited patients to undergo unnecessary exams and then the clinic operators and medical supply company billed Medi-Cal and Medicare.

Baghdasaryan supplied false information to the Franchise Tax Board to conceal stolen funds in 2003 and 2004. Garrison under-reported and failed to report to the Franchise Tax Board monies he was paid by Dr. Hollander, Dr. Rito Castanon-Hill, United Management Group, Inc., and S.M.C. Group, Inc., violations of Revenue and Taxation code Section 19706, Tax Evasion.

All of the defendants are charged with Penal Code Section 550, Submission of False Insurance claims; Penal Code Section 487, Grand Theft; Welfare & Institutions Code Section 14107, submission of False Medi-Cal Claims: and Penal Code Section 186.10 (a) (1), Money Laundering.

Agencies involved in the investigation include the California Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse, Los Angeles Health Authority Law Enforcement Task Force, United States Office of Inspector General Health and Human Services, the Department of Health Services and Glendale Police Department. During the investigation, agents executed search warrants in Tujunga, Chatsworth, Glendale and the LAX area, seized 4 guns, and approximately $150,000 in cash.

Medi-Cal is a state managed program that pays for essential medical services, medical equipment, and medication for qualifying disabled, indigent and elderly California residents. It is funded by the state and federal governments and administered by the California Department of Health Services.

The Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse investigates and prosecutes those who file fraudulent claims for medical services, medical equipment and drugs.

During the 2005/2006 Fiscal Year, the Bureau of Medi-Cal Fraud and Elder Abuse recovered $267,854,037 in Medi-Cal fraud and $6,525,097 in criminal prosecutions.

Suspects charged include:

• Richard Melkonyan (DOB 12/11/1970) was arrested at his home in Glendale, California.
• Akop Melkonian (DOB 10/28/1972) was arrested at his home in Chatsworth, California.
• Lilit Baghdasaryan (DOB 06/12/1980) was arrested at her home in Tujunga, California.
• David James Garrison (DOB 06/16/1961) resides in Los Angeles, California, is currently at large.
• Neil Hollander, M.D. (DOB 07/28/1940) resides in Huntington Beach, California, has agreed to surrender to authorities next week.
• Rito Castanon-Hill, M.D. (DOB 08/19/1971) arrested at his home in Los Angeles, California.

The California Supreme Court on Wednesday upheld California’s $3 billion stem cell agency, which was approved by voters under Proposition 71 in 2004. California Attorney General Edmund G. Brown Jr.’s office defended the measure’s legal challenge. Fifty-nine percent of voters approved the groundbreaking measure in 2004.

Wednesday’s decision frees $3 billion in funding for stem cell research that was stalled by opponents’ frivolous legal challenges. California voters adopted the measure in the wake of the Bush administration’s failure to support research that potentially help people with Parkinson’s disease, diabetes, spinal cord injuries and other serious conditions.

“I pledged to vigorously support stem cell research and today is a victory for California’s voters and medical science,” Brown said. “This decision allows California to take on the groundbreaking scientific research that the Bush administration ignored.”