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

Date: June 8, 2012

Forest Laboratories to Pay $790,000 in Drug Pricing Settlement

(Boise) – Prescription drug manufacturer, Forest Laboratories, Inc., agreed to pay $790,000 in a legal settlement resolving Idaho’s claims relating to the “average wholesale prices” reported by the company, Attorney General Lawrence Wasden said.

Wasden’s office has recovered more than $21 million in average wholesale price settlements with 29 drug manufacturers.  Three lawsuits Wasden filed in 2007 are still pending against seven other drug manufacturers.

The lawsuits seek to recover taxpayer money for excessive prices Idaho Medicaid paid for prescription drugs.  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 Forest’s pharmaceutical product Celexa had a published average wholesale price of $0.480 in 2003, but Wasden’s investigation revealed an actual average wholesale price of $0.376 in 2003.  This results in a 28% difference between the published price and the actual price.

“The publishing of false drug prices harms taxpayers and the State,” Attorney General Wasden said.  “My office has investigated and litigated this matter and what we uncovered is that in a very large number of instances, drug manufacturers reported false and inflated prices for their drugs.”

The settlement is intended to reimburse taxpayers for the excessive prices Idaho Medicaid paid for prescription drugs as a result of inflated average wholesale price reporting.   $185,228.21 will be deposited in the State’s General Fund to be appropriated by the Idaho Legislature.  $461,030.94 will be deposited into the Cooperative Welfare Fund to reimburse the federal share of the Medicaid overpayments.  Idaho will retain this money as an offset against a future federal Medicaid payment.  $50,000 will go to the consumer protection account to reimburse the Attorney General for investigative and legal costs.

The settlement with Forest has been approved by the Fourth District Court in Ada County.  The company admitted no liability or wrongdoing.

“This settlement addresses the harm incurred by Idaho’s taxpayers and the State,” Attorney General Wasden said.  “It should stop the reporting of false and misleading drug prices and provide the State significant financial relief.  This settlement is good for Idaho because it successfully resolves this dispute without the need for further, costly litigation.”

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