Hawaii AG settles AWP suits for $82M

Keith Loria Oct. 8, 2010, 12:22pm


HONOLULU, Hawaii (Legal Newsline) - Hawaii Attorney General Mark Bennett announced on Wednesday that he has reached a total of $82 million in settlements with pharmaceutical manufacturers that allegedly marketed and sold prescription drugs at higher rates than allowed.

Beginning in April 2006 and later amending the complaint to include others, the state has sued more than 40 drug companies in an attempt to stop soaring drug prices and recover inflated costs paid for prescription drugs.

The suit alleged that the drug makers had published inflated prices for prescription drugs for over 10 years, causing overpayments of millions of dollars in drug costs.

To date, cash settlement agreements have been reached with almost all of the named parties.

Under the most recent settlement agreement, Merck Sharp & Dohme Corp., formerly known as Merck & Co. Inc., will pay $28 million; AstraZeneca Pharmaceuticals LP, AstraZeneca LP, GlaxoSmithKline LLC, formerly known as SmithKline, Beecham Corporation, doing business as GlaxoSmithKline, and Novartis Pharmaceuticals Corporation will collectively pay $10 million; Pharmaceuticals Inc., and Sicor Pharmaceuticals Inc. will collectively pay $6.5 million; and Johnson & Johnson, Janssen Pharmaceutical Products LP, Ortho Biotech Products LP, McNeil-PPC Inc., and Centocor Inc., will collectively pay $5.2 million.

"Manipulation of average wholesale prices cost Hawaii and the federal government millions of dollars," Bennett said.

"We brought this litigation in an effort to recover overcharges and to restore transparency and fairness. We are pleased that we were able to achieve what we believe is a fair resolution. This lawsuit, however, may be only the first phase in the state's litigation efforts to recover prescription drug overcharges."

Of the collectively paid $82,654,756.12, 15 percent will go to attorneys' fees and approximately $1,500,000 will go to the costs of litigation. A substantial portion of the money will go to the federal government. That number has yet to be determined.

Claims against Hospira were dismissed because Abbott Laboratories Inc. agreed to take responsibility for its drugs. The claims against TAP and Bayer Corporation were dismissed because a U.S. Department of Justice settlement resolved Hawaii's claims before the state filed suit.

Under state law, Hawaii pays all prescription drug costs for Medicaid patients. The cost of prescription drugs in the Hawaiian Medicaid program soared from $45 million in 1999 to $117 million in 2004, an increase of 160 percent.

The average wholesale price for a drug is determined by the drug's manufacturer and is a significant factor in determining the amount of money that Medicaid will pay for a drug.

False average wholesale price reporting has the effect of increasing the profitability of an individual drug for the provider and stimulates the demand for that drug, resulting in more sales for the drug company.

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