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

Date: August 27,2013

Wasden Recovers $28 Million in Medicaid Drug Cases

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(Boise) – Attorney General Lawrence Wasden said today that his office has completed six years of litigation involving false price reporting by major pharmaceutical companies. Wasden's office recovered $28,399,469.44 in the effort and won important price disclosure concessions that will help protect Idaho taxpayers from future abuses.

The State of Idaho's claims against 33 prescription drug manufacturers stemmed from the manufacturer's allegedly false reporting of "average wholesale prices" of individual prescription drugs. Wasden asserted that, as a result of the false reporting, Idaho Medicaid overpaid millions of dollars for medication over a period of many years.

Idaho Medicaid provides healthcare services, including prescription drugs, to low-income Idahoans. It is jointly funded by the State of Idaho and the federal government. By law, Idaho Medicaid must reimburse pharmacies at the "estimated acquisition cost" of the drug, plus a dispensing fee. Until July 1, 2011, Idaho Medicaid primarily used "average wholesale price," as reported by drug manufacturers, as a basis for determining this amount.

However, the reported "average wholesale price" was often an inflated number, far larger than the price actually paid to the manufacturer. For example, in 2003, Watson Pharmaceuticals, Inc. reported an average wholesale price 1534% higher than the actual average wholesale price of the prescription drug Clorazepam. Clorazepam is a generic version of the epilepsy drug Klonopin.

"In negotiating these settlements, we tried to look forward as well as backward," Attorney General Wasden said. "We recovered a significant amount of money to compensate the state for past practices. But equally as important, the state will receive pricing data from these companies going forward. That element of the settlements will help protect the taxpayers from future pricing abuses."

"Preserving the integrity of the Idaho Medicaid program from fraud is very important to all of us," said Richard Armstrong, director of the Idaho Department of Health and Welfare. "We owe our Attorney General's office a heartfelt thanks in protecting taxpayer dollars and preserving the limited resources we have to care for our state's most vulnerable citizens."

The majority of the settlement funds, $24,112,037.59, reimbursed the state, in part, for the extra money it paid for prescription drugs based on false and inflated average wholesale prices. Because Idaho Medicaid receives approximately 70% of its funding from the federal government, federal law requires that the federal government receive its share of any recoveries of Medicaid funding. Therefore, $13,557,797.54 was "returned" to the federal government in the form of credits against future payments to Idaho Medicaid. The State of Idaho's share of the settlement, $7,161,357.03, was placed into the General Fund for appropriation by the Legislature.  The General Fund is the pool of money the Legislature uses to fund the state's share of Idaho Medicaid, as well as other programs. The balance of the settlement was used to cover the costs of the investigations and litigation.

Wasden praised Deputy Attorney General Jane Hochberg for leading the state's six-year-long litigation effort. That work involved thousands of hours of work, including preparation and/or review of more than one-and-one-quarter million pages of documents.

The settling drug companies, settlement dates, and the amount of each settlement are:

 

DATE

 

COMPANY

 

SETTLEMENT

07/12/05

TAP Pharmaceutical Products, Inc. (Lupron drug only)*

$252,027.44

10/29/06

Dey, Inc. and Dey, L.P.*

$1,180,600.00

06/25/08

Bristol-Myers Squibb Company and Apothecon, Inc.*

$1,738,719.00

07/23/09

Ben Venue Laboratories, Inc., Boehringer Ingelheim Pharmaceuticals, Inc., Roxane, Inc.

$660,000.00

06/10/10

Alpharma USPD Inc. and Purepac Pharmaceutical Co.

$1,274,623.00

08/23/10

Teva Pharmaceuticals USA, Inc., Ivax Corp., Ivax Pharmaceuticals, Inc., and Barr Laboratories, Inc.

$1,900,000.00

10/22/10

Sandoz, Inc.

$1,650,000.00

01/14/11

Warrick Pharmaceuticals Corporation and Schering-Plough Corp.

$750,000.00

03/31/11

Par Pharmaceuticals Cos., Inc.

$1,700,000.00

08/10/11

AstraZeneca Pharmaceuticals LP and AstraZeneca LP

$2,500,000.00

09/28/11

Merck Sharp & Dohme Corp., f/k/a Merck & Co., Inc.

$1,600,000.00

12/05/11

Johnson & Johnson, Centocor, Inc., Janssen Pharmaceutical Products, LP, McNeil-PPC, Inc., Ortho Biotech Products, LP, Ortho-McNeil Pharmaceutical, Inc.

$2,000,000.00

01/27/12

Mylan Inc. and Mylan Pharmaceuticals Inc.

$625,000.00

04/13/12

SmithKline Beecham Corp., d/b/a GlaxoSmithKline

$2,600,000.00

06/01/12

Forest Laboratories, Inc.

$790,000.00

07/12/12

Watson Pharma, Inc. and Watson Pharmaceuticals, Inc.

$1,700,000.00

07/31/12

Aventis Pharmaceuticals Inc.

$828,500.00

12/27/12

Pfizer Inc. and Pharmacia Corp.

$2,900,000.00

02/05/13

Abbott Laboratories

$1,000,000.00

07/10/13

Novartis Pharmaceuticals Corp.

$750,000.00

 

TOTAL:

$28,399,469.44

* Pre-Litigation Settlement

Read the Average Wholesale Price Litigation Report

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