For Immediate Release
Media Contact: Bob Cooper
(208) 334-4112

Date: March 29, 2011

Par Pharmaceutical to Pay Idaho $1.7 Million in Medicaid Drug Pricing Settlement

(Boise) – Prescription drug manufacturer Par Pharmaceutical Cos., Inc. has agreed to pay $1.7 million in a legal settlement resolving Idaho’s claims relating to the “average wholesale prices” reported by the company, Attorney General Lawrence Wasden said.

Idaho Medicaid provides health care services, including prescription drugs, to low-income Idahoans.  By law, Idaho Medicaid must reimburse pharmacies at the “estimated acquisition cost” of the drug.  Idaho Medicaid primarily uses “average wholesale price,” as reported by drug manufacturers, as a basis for determining this amount.

If the manufacturer reports an inflated or false average wholesale price for a drug, taxpayers can pay too much for that drug through Medicaid reimbursements.  For example, one unit of Par’s pharmaceutical product Fluoxetine, a generic version of Prozac, had a published average wholesale price of $2.731 in 2003, but Attorney General Wasden’s investigation revealed an actual average wholesale price of $0.081 in 2003.  This results in a 3292% difference between the published price and the actual price.

“Where published prices are false or misleading, the taxpayers are significantly harmed by excessive Medicaid reimbursements,” Attorney General Wasden said.  “Investigation by my office has revealed that the reported average wholesale price often is not related to the actual wholesale price paid for the drug.  Misrepresenting the wholesale price is a violation of the Idaho Consumer Protection Act.”

The $1.7 million payment is intended to reimburse taxpayers for the excessive prices Idaho Medicaid paid for prescription drugs as a result of inflated average wholesale price reporting.  $422,214.80 will be deposited in the state’s General Fund to be appropriated by the legislature.  $50,000 will go to the consumer protection account to reimburse the attorney general for investigative and legal costs.  More than $1 million will go to the state’s Cooperative Welfare Fund and will be applied as a credit against the federal government’s next payment to Idaho Medicaid.  The federal government pays for approximately 70% of the cost of the Idaho Medicaid program.

The settlement with Par has been submitted for approval by the Fourth District Court in Ada County.  The company admitted no liability or wrongdoing.

“This settlement provides relief to Idaho taxpayers and brings the matter to a conclusion without the need for continued litigation,” Attorney General Wasden said.  “I appreciate that the company was willing to work with my office to reach an appropriate resolution.”

Since 2005, Wasden has resolved nine average wholesale price cases with drug manufacturers, including this settlement, resulting in $11 million recovered.  Three average wholesale price cases, naming approximately 20 other drug manufacturers, are still pending.

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