Idaho Attorney General concludes six-year litigation effort against drug companies

newsroom@idahostatesman.comAugust 27, 2013 

Attorney General Lawrence Wasden's office announced Tuesday the conclusion of six years of litigation against major pharmaceutical companies accused of reporting prices in a way that caused Idaho Medicaid to overpay for drugs.

Wasden's office has recovered $28.4 million through the lawsuits and pre-litigation settlements.

The state's claims against 33 prescription drug manufacturers stemmed from the manufacturer’s allegedly false reporting of "average wholesale prices" of prescription drugs. Idaho Medicaid provides healthcare services, including prescription drugs, to low-income Idahoans. It is jointly funded by the state and federal governments. By law, Idaho Medicaid must reimburse pharmacies based on the "estimated acquisition cost" of the drug, plus a dispensing fee. Until July 1, 2011, Idaho Medicaid mainly used the "average wholesale price" reported by drug makers as a basis for determining the cost, Wasden said.

But the state argued the companies had inflated their prices. For example, in 2003, Watson Pharmaceuticals Inc. reported an average wholesale price 1,534 percent higher than the actual average wholesale price of the generic epilepsy drug Clorazepam, Wasden said. "In negotiating these settlements, we tried to look forward as well as backward," 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."

Richard Armstrong, director of the Idaho Department of Health and Welfare, said, "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."

Almost half of the money was credited toward federal payments for Medicaid, since the program is funded about 70 percent by the federal government.

Idaho's share of the settlement funds, $7.2 million, was placed into the general fund for appropriation by the Idaho Legislature. The rest was used to cover the costs of the investigations and litigation.

Wasden praised Deputy Attorney General Jane Hochberg for leading the six-year litigation effort, which involved thousands of hours of work, including preparation and/or review of more than 1.25 million pages of documents.

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

• 7/12/05, TAP Pharmaceutical Products Inc. (Lupron drug only)* $252,027

• 10/29/06, Dey Inc. and Dey LP* $1.2 million

• 6/25/08, Bristol-Myers Squibb Company and Apothecon Inc.* $1.7 million

• 7/23/09, Ben Venue Laboratories Inc., Boehringer Ingelheim Pharmaceuticals Inc., Roxane Inc. $660,000

• 6/10/10, Alpharma USPD Inc. and Purepac Pharmaceutical Co. $1.3 million

• 8/23/10, Teva Pharmaceuticals USA Inc., Ivax Corp., Ivax Pharmaceuticals Inc. and Barr Laboratories Inc. $1.9 million

• 10/22/10, Sandoz Inc. $1.65 million

• 1/14/11, Warrick Pharmaceuticals Corp. and Schering-Plough Corp. $750,000

• 3/31/11, Par Pharmaceuticals Cos. Inc. $1.7 million

• 8/10/11, AstraZeneca Pharmaceuticals LP and AstraZeneca LP $2.5 million

• 9/28/11, Merck Sharp & Dohme Corp., f/k/a Merck & Co. Inc. $1.6 million

• 12/05/11, Johnson & Johnson, Centocor Inc., Janssen Pharmaceutical Products LP, McNeil-PPC Inc., Ortho Biotech Products LP, Ortho-McNeil Pharmaceutical Inc. $2 million

• 1/27/12, Mylan Inc. and Mylan Pharmaceuticals Inc. $625,000

• 4/13/12, SmithKline Beecham Corp., d/b/a GlaxoSmithKline $2.6 million

• 6/01/12, Forest Laboratories Inc. $790,000

• 7/12/12, Watson Pharma Inc. and Watson Pharmaceuticals Inc. $1.7 million

• 7/31/12, Aventis Pharmaceuticals Inc. $828,500

• 12/27/12, Pfizer Inc. and Pharmacia Corp. $2.9 million

• 2/05/13, Abbott Laboratories $1 million

• 7/10/13, Novartis Pharmaceuticals Corp. $750,000

* pre-litigation settlement

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