Business

Drug Trade Is Profitable For Those Who Sell

With Obama Care, Fiscal Cliff, Health Insurance Exchanges, Medicare Part A, B, C, Medicaid, Social Security Disability, Indigent Care, and more it’s no wonder we tune out when it comes to understanding who pays what and how much.

There has been a string of settlements between drug companies and Idaho’s Attorney General over the past five years. Cases initiated between 2001 and 2003 have brought in $25 million to the state coffers of Idaho. Not a single company has admitted any guilt, but they have ponied up millions of dollars.

Figures from one lawsuit claim Idaho spent $166 million for medicaid provided drugs in 2005 when 12% of the population received assistance.

DECEMBER 27 News from Attorney General Lawrence Wasden–
Prescription drug manufacturers Pfizer Inc. and Pharmacia Corp. have agreed to pay Idaho $2.9 million in a legal settlement resolving the state’s claims relating to the “average wholesale prices” reported by the companies, Attorney General Lawrence Wasden said today.

Wasden sued several prescription drug manufacturers, including Pfizer and Pharmacia, in 2007 to recover taxpayer money for excessive prices Idaho Medicaid paid for prescription drugs. Including today’s settlements, Wasden’s office has recovered more than $25 million in average wholesale price settlements with 36 drug manufacturers. Lawsuits are still pending against two other drug manufacturers.

Idaho Medicaid provides health care services, including prescription drugs, to low-income Idahoans. By law, Idaho Medicaid must reimburse pharmacies at the “estimated acquisition cost” of the drug, plus a dispensing fee. Until July 1, 2011, Idaho Medicaid primarily used “average wholesale price,” as reported by drug manufacturers, as a basis for determining this amount.

However, the reported “average wholesale price” was often an inflated number, far larger than the price actually paid to the manufacturer. For example, in 2003 Pfizer reported an average wholesale price of 26% above the actual average wholesale price of the prescription drug Zyrtec. That same year, Pharmacia’s reported average wholesale price for Celebrex was 28% higher than the actual average wholesale price.

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

The settlement is intended to reimburse taxpayers for the excessive prices Idaho Medicaid paid for prescription drugs as a result of inflated average wholesale price reporting. $733,760.39 will be deposited in the state’s General Fund, which is the source of money for the state’s share of Medicaid prescription drug costs. $1,825,227.98 will be deposited into the Cooperative Welfare Fund to reimburse the federal Medicaid share. Idaho will retain this money as an offset against a future federal Medicaid payment. $50,000 will go to the Consumer Protection Account to reimburse the Attorney General for investigative and legal costs. That account partially funds the Attorney General’s consumer protection operations.
The settlement with Pfizer and Pharmacia has been approved by the Fourth District Court in Ada County. The companies admitted no liability or wrongdoing.

Comments & Discussion

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  1. Ironic that today Zyrtec is OTC.
    Glad Wasden is on the ball with Medicaid fraud.

  2. Ha, just the cost of doing business as usual.

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