Pennsylvania settles AWP suit with Dey

By Bryan Cohen | Apr 28, 2011


HARRISBURG, Pa. (Legal Newsline) - Acting Pennsylvania Attorney General Bill Ryan announced on Wednesday that his office has recovered $2 million as part of a settlement with a Delaware pharmaceutical company.

The settlement with Dey Pharmaceuticals will provide reimbursement for three state agencies following allegations that the company artificially inflated prices in an effort to increase sales and profits.

The agencies allegedly paid higher prices for drugs, including $1,381,612 by the Pennsylvania Department of Public Welfare, $453,890 by the Pharmaceutical Assistant Contract for the Elderly and $163,498 by the Pennsylvania Employees Benefit Trust Fund.

The settlement is part of a continuing effort by the attorney general's office to address accusations that multiple companies manipulated the drug pricing benchmark called Average Wholesale Price.

The attorney general's office filed a lawsuit against 15 major drug companies in March 2004 over an alleged scheme where companies created a "spread" between the AWP and actual wholesale prices. The spread was allegedly used for purposes ranging from providing financial incentives to doctors to prescribe certain drugs to pharmacies getting incentives to stock the drugs.

Settlements or court rulings totaling over $118 million for various state programs and agencies have been secured as a result of the drug pricing lawsuits, including a $10 million agreement with AstraZeneca of Wayne, Pa.; $1.8 million for GlaxoSmithKline of Philadelphia; $6.95 million from the Illinois-based Abbott Laboratories; and a $13 million collective settlement with Amgen Inc., of Thousand Oaks, Calif., Boehringer Ingelhelm Roxane of Ridgefield, Conn., and Baxter Healthcare Corp., of Deerfield, Ill.

In December 2010, Johnson & Johnson Inc., based in New Jersey, was found liable for close to $52 million in damages and civil penalties for falsely reporting the prices of its drugs. Earlier in 2010, the attorney general's office received $27.6 million from a case involving Bristol-Myers Squibb. Both companies are appealing the rulings against them.

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