Idaho AG settles AWP case for $2M

Bryan Cohen Dec. 6, 2011, 1:18pm


BOISE, Idaho (Legal Newsline) - Idaho Attorney General Lawrence Wasden announced a $2 million settlement on Tuesday with prescription drug maker Johnson & Johnson to resolve allegations related to the average wholesale prices the company reported.

The Johnson & Johnson subsidiary companies named in the settlement include Centocor Inc., McNeil-PPC Inc., Biotech Products LP, Ortho-McNeil Pharmaceutical Inc. and Janssen Pharmaceutical Products LP.

Idaho Medicaid provides health care services to low-income Idahoans, including discounted prescription drugs. Legally, Idaho Medicaid must reimburse pharmacies at the estimated acquisition cost of the medications. Idaho Medicaid primarily uses average wholesale price as reported by drug manufacturers as a main source for coming up with this amount.

If the manufacturer reports false or inflated average wholesale prices for a drug, taxpayers may pay too much for that drug through Medicaid reimbursements. One unit of Johnson & Johnson's pharmaceutical product Duragesic had a published average wholesale price of $52.066 in 2003. It was later revealed that the actual average wholesale price for the drug was $41.406 in 2003. This is a 26 percent difference between the published price and the actual price.

"The publishing of false drug prices harms taxpayers and the state," Wasden said. "My office has investigated and litigated this matter and what we uncovered is that in a very large number of instances, drug manufacturers reported false and inflated prices for their drugs."

The settlement will reimburse taxpayers for the excessive prices Idaho Medicaid paid for prescription drugs as a result of the reporting of an inflated average wholesale price. More than $479,000 will be deposited in the state's general fund to be appropriated by the Idaho legislature. A total of $50,000 of the fund will go to the consumer protection account to reimburse Wasden for legal costs and more than $1.1 million will go to the state's cooperative welfare fund to be applied as a credit against the federal government's next payment to Idaho Medicaid. The federal government pays for approximately 70 percent of Idaho Medicaid program costs.

The Fourth District Court in Ada County approved the settlement, in which the company admitted no wrongdoing or liability.

"This settlement addresses the harm incurred by Idaho's taxpayers and the State," Wasden said. "It should stop the reporting of false and misleading drug prices and provide the state significant financial relief."

Wasden has resolved 12 average wholesale price cases with drug manufacturers since 2005, including this settlement. The settlements have resulted in over $17 million recovered. Three average wholesale price cases, which name 11 other drug manufacturers, are still pending.

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