Pa. AG announces $49M in pharma settlements

Jessica M. Karmasek Sep. 13, 2011, 12:14pm


HARRISBURG, Pa. (Legal Newsline) - Pennsylvania Attorney General Linda Kelly announced this week that more than $49 million has been recovered for three state agencies as part of a settlement between her office and drugmakers Aventis, Bayer, Schering and Pfizer.

The Attorney General's Office alleged that the pharmaceutical companies artificially inflated drug prices in order to increase sales and profits.

The settlement money will reimburse state agencies and government benefit programs that were allegedly forced to pay higher prices, including $18,248,482 for the Pennsylvania Department of Public Welfare; $22,659,452 for the Pharmaceutical Assistance Contract for the Elderly, run by the Pennsylvania Department of Aging; and $8,242,746 for the Pennsylvania Employees Benefit Trust Fund.

Kelly said this week's settlement is part of a continuing effort by the Attorney General's Office to address accusations that numerous companies manipulated a drug pricing benchmark known as Average Wholesale Price.

In 2004, lawsuits were filed against 15 major drug companies and their subsidiaries over the scheme, where companies allegedly created a "spread" between actual wholesale prices and the AWP, and used that spread as a financial incentive for doctors and pharmacies to prescribe or stock various drugs.

To date, the Attorney General's Office has secured court rulings or settlements totaling more than $167 million for various state agencies and programs as the result of these drug pricing lawsuits.

In December 2010, New Jersey-based Johnson & Johnson Inc. was found liable for nearly $52 million in damages and civil penalties for falsely reporting the prices of its drugs, following a five-week trial.

Last year, the Attorney General's Office also received a $27.6 million award in a case involving Bristol-Myers Squibb.

Both Johnson & Johnson and Bristol-Myers Squibb are appealing the rulings against them, Kelly's office said.

Settlements also have been reached with other pharmaceutical companies accused of similar price activity, including a $10 million agreement with Astra Zeneca; $6.95 million from Illinois-based Abbott Laboratories; $1.8 million for GlaxoSmithKline of Philadelphia; a $13 million collective settlement with Amgen Inc. of Thousand Oaks, Calif., Baxter Healthcare Corp. of Deerfiled, Ill., and Boehringer Ingelhelm Roxane of Ridgefield, Conn.; and $2 million for Dey Pharmaceutical of Delaware.

From Legal Newsline: Reach Jessica Karmasek by email at

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