BOISE, Idaho (Legal Newsline) - Idaho Attorney General Lawrence Wasden announced a $2.6 million settlement on Tuesday with a prescription drug manufacturer resolving allegations that the company incorrectly reported drug prices.
SmithKline Beecham Corporation, doing business as GlaxoSmithKline, will reimburse Idaho taxpayers $2.6 million for Idaho's share of the excessive prices Idaho Medicaid paid for prescription drugs due to the inflated average wholesale prices that were reported.
"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."
Idaho Medicaid provides low-income Idahoans with health care services such as prescription drugs. Idaho Medicaid is required to reimburse pharmacies for the estimated acquisition cost of a prescription drug. Idaho Medicaid uses average wholesale price primarily to determine the reimbursement amount. An average wholesale price is reported by the manufacturers of the drugs.
When a manufacturer reports a false or inflated average wholesale price for a drug, taxpayers may pay too much for the drug through Medicaid reimbursements. One unit of Wellbutrin, a pharmaceutical product manufactured by GlaxoSmithKline, had a published average wholesale price in 2003 of $2.012. The actual average wholesale price of the drug in 2003 was $1.590, resulting in a 27 percent difference between the published and actual price.
Of the $2.6 million settlement, more than $620,000 will be deposited in the state's general fund. Approximately $1,544,000 will be deposited into the cooperative welfare fund for the reimbursement of the federal government for its Medicaid overpayments share as an offset for future federal Medicaid payments. In addition, $50,000 will go to the consumer protection account to reimburse Wasden's office for legal costs.
GlaxoSmithKline admitted no wrongdoing or liability as part of the agreement.
"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. This settlement is good for Idaho because it successfully resolves this dispute without the need for further, costly litigation."
There are three average wholesale price cases that name eight other drug manufacturers still pending.