BOISE, Idaho (Legal Newsline) - Idaho Attorney General Lawrence Wasden announced a $2.9 million drug pricing settlement Thursday with Pfizer Inc. and Pharmacia Corp. to resolve claims related to reported average wholesale prices.

Pfizer and Pharmacia allegedly inflated the average wholesale prices they reported to Idaho Medicaid, causing taxpayers to pay too much for drugs through Medicaid reimbursements.

In 2003, Pfizer reported an average wholesale price of 26 percent above the actual average wholesale price for Zyrtec. Pharmacia reported an average wholesale price for its drug Celebrex that was 28 percent higher than the actual average wholesale price in 2003.

Idaho Medicaid provides healthcare services such as prescription drugs to low-income Idahoans. Idaho Medicaid reimburses pharmacies at the estimated acquisition cost of drugs, plus a dispensing fee. The state's Medicaid program used average wholesale price reported by drug manufacturers as the basis for determining the reimbursement until July 1, 2011.

In 2007, Wasden sued several prescription drug manufacturers, including Pharmacia and Pfizer, to recover taxpayer money for the excessive prices Idaho Medicaid paid for prescription drugs.

"When a manufacturer reports an inflated or false average wholesale price for a drug, taxpayers pay too much for that drug through Medicaid reimbursements," Wasden said.

The state will deposit $1,825,227.98 of the $2.9 settlement into the Cooperative Welfare Fund for the reimbursement of the federal Medicaid share. The state's general fund will receive $733,760.39 to pay for its share of Medicaid prescription drug costs. A portion of the settlement funds, $50,000, will go to Wasden's consumer protection account for attorney fees.

Pfizer and Pharmacia admitted no wrongdoing or liability as part of the agreement.

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