Seven years ago, lawyers and investigators in the Idaho attorney generals Consumer Protection Division tugged at a thread. The whole sweater began to unravel.
Division chief Brett DeLange had seen reports from other states alleging price manipulation by drug companies. He suspected it might be happening in Idaho.
He told Attorney General Lawrence Wasden: If thats true, thats probably really hurt Medicaid. Why? Because the state and federal taxpayer-supported health insurance for the poor pays for prescription drugs based on the prices reported by drug companies.
Wasden decided to investigate. His staff subpoenaed drug-wholesaler records and sued dozens of companies.
Fast forward to 2012. Most cases are now settled. Some companies held out until days before they were scheduled to meet Idahos lawyers in court.
Litigation is still pending against a few of the more than 30 companies sued for illegal pricing.
Wasdens office has recovered:
$23.7 million in 17 drug-pricing settlements.
Another $23.7 million in 13 settlements with drug companies that were accused in most cases of illegally marketing drugs.
$1.2 million in drug-industry antitrust settlements.
Idaho was singled out last month as a leader in drug-pricing lawsuits by the consumer-rights nonprofit Public Citizen.
There are two main ways a state can take on consumer-protection cases: by joining a multistate investigation or going it alone. Idaho has done both.
Joining a multistate settlement yielded $2.8 million in reimbursement from a Johnson and Johnson subsidiary about six weeks ago.
These are very large matters, sometimes involving millions of pages of documents or large sizes of data, DeLange said. Joining together, you use your resources more effectively.
If Idaho is especially affected, the state may pursue its own claims.
In 2008, drugmaker Eli Lilly settled for $62 million with 33 states that alleged the company illegally promoted its antipsychotic drug Zyprexa. Idaho opted to be one of several states that chose to pursue their own cases against Eli Lilly (and) recovered far more in single-state settlements than they would have otherwise received from the multistate agreement, Public Citizen wrote. Idaho recovered $13 million in that case, which the two sides settled in 2009.
Wasden and DeLange said in interviews that the attorney generals role isnt to take on Big Pharma or any other industry. And despite its track record in fiscal 2011, the team recovered $14.41 for each dollar it was appropriated, adding $1.6 million to Idahos general fund the AGs role isnt to rake in cash for state coffers.
Wasdens role is to protect Idaho and its taxpayers from bad actors.
More than 12,000 Idahoans should see evidence in their wallets soon. Wasden just announced that some Idaho borrowers will get money from five of the nations largest banks, which agreed in a $25 billion multistate settlement to pay people who lost their homes in foreclosures that may have resulted from loan servicing errors.
We dont go out and target industries, Wasden said. Well hear from consumers that something is amiss. Oftentimes well find that whats going on in some other state is happening here as well. We have to look at: What is the impact in Idaho?
Q: Tell me more about the Zyprexa case. How did you decide to pursue it?
DeLange: The harm, we felt, was so large in our state. Its amazing how many people on Idaho Medicaid alone use Zyprexa. Its thousands ... and lots of people developed diabetes. And guess who ends up paying for that? The taxpayer. The allegation is if (Eli Lilly) had been up front and honest about it, we wouldnt have had so many people diabetic. We had experts prepared to testify.
Q: Whats the story behind the drug-pricing cases?
DeLange: When we started that (investigation) seven-plus years ago, we didnt know at the time we began how many companies it would involve or the breadth of it. ... We have a lawyer (Jane Hochberg) who has literally put in easily over 10,000 hours over the years now on this matter.
I think its really quite discouraging that we have had this many different cases with these many instances of what we think was very inappropriate, unlawful marketing of products, covering things up, making claims that arent substantiated, conspiring to keep prices high, reporting simply false prices.
Wasden: We said the process we want to employ is to first sit down with (the companies) and talk with them, because if we can resolve it that way, it costs a lot less money to do it, and you get a lot more satisfactory result. So we didnt just file a 200-page complaint naming everybody and their dog with cameras rolling on the statehouse steps. We said come sit down and talk to us.
You really can funnel those into three categories of responses.
One is they came in and talked to us, threw everything on the table, and we sifted through it, and (we said), Based on what we see here, we dont think we have a cause of action, thank you very much, we appreciate your participation.
Second approach is they came in, threw everything on the table, and we sifted through it and said we dont have questions about A, B or C, but we do have questions about X, Y and Z. (That) narrowed the focus of what the dispute was.
We had a third category where they just said, Were not going to come talk to you. Well, theres only one forum then for us to have that discussion, and that forum is the courtroom.
Q: Should these companies be banned from doing business with Idaho?
Wasden: I dont know who else youre going to get medicine from. If you have to have a prescription for diabetes, youve got to work with companies to get those drugs. Its the Legislature that makes that kind of determination, not us.
Q: Do you worry that suing these companies will end up raising drug prices?
Wasden: I dont think so. Theyre making a lot of money. You consider the fact that the falsely reported (price) is 200 percent to 3,000 percent (higher than it should be), thats a lot of cash going in one direction. It would take an economist to answer that question, but I think they probably have a lot of profits sitting around to pay those reparations.
Q: What do these lawsuits give the consumers and taxpayers of Idaho?
Wasden: It doesnt matter whether youre the largest employer in the state or whether youre a mom-and-pop grocery store. Youve got to live by the same set of rules. ... What have we returned to consumers? A more level playing field. There is an entity out there thats willing to say, No, you have to play by the rules. That gives a return to the consumers in the long run that the marketplace is more fair.
DeLange: Business should be accountable for what they say, and what they dont say. Let the chips fall from there.
Wasden: Let the political chips fall where they may. In some cases, (we recover) money, damages. Another thing weve done is help to restore to the state money that its taxpayers were paying. We return right around $40 million to $50 million a year. On average that is about what we contribute to the general fund.
Audrey Dutton: 377-6448, Twitter: @IDS_Audrey. Edited for space and clarity.