Drug Firms Swallow Bitter Pill Over Pricing

Idaho”s Attorney General continues his winning ways against drug companies with his latest settlement claiming overcharges through false price statements. It may be time for some of the drug firms to take a pain pill.

Prescription drug manufacturers Watson Pharmaceuticals, Inc. and Watson Pharma, Inc., agreed to pay $1,700,000 in a legal settlement resolving Idaho’s claims relating to the “average wholesale prices” reported by the companies, Attorney General Lawrence Wasden said. And that was just Idaho’s portion.

Wasden’s office has recovered more than $22 million in average wholesale price settlements with 31 drug manufacturers. Two lawsuits Wasden are still pending against five other drug manufacturers.

He has filed lawsuits against several prescription drug manufacturers, including Watson, in 2007. The lawsuits seek to recover taxpayer money for excessive prices Idaho Medicaid paid for prescription drugs. 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. Idaho Medicaid primarily uses “average wholesale price,” as reported by drug manufacturers, as a basis for determining this amount.

One unit of Watson’s pharmaceutical product, Lorazepam, had a published average wholesale price of $0.662 in 2003, but Wasden’s investigation revealed an actual average wholesale price of $0.049 in 2003. This results in a 1,239 percent difference between the published price and the actual price.

“The publishing of false drug prices harms taxpayers and the State,” Attorney General 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 is intended to reimburse taxpayers for the excessive prices Idaho Medicaid paid for prescription drugs as a result of inflated average wholesale price reporting. $423,724.61 will be deposited in the state’s General Fund to be appropriated by the Idaho Legislature. $1,055,459.48 will be deposited into the Cooperative Welfare Fund to reimburse the federal share of the Medicaid overpayments. 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.

Comments & Discussion

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  1. brian vermillion
    Jul 16, 2012, 3:27 pm

    This is the new definition of government: levying fines and taxing people and companies for any non compliance.

  2. Isn’t THAT a pill! The AG grabs the bucks from the suit in the guise of a medicaid re-reimbursement but what about the people who paid out of pocket or had prescription drug coverage as required by medicare? Pretty lopsided settlement if you ask me.

  3. The base price of pill just went up a touch.

    If they wont lock up John Edwards and all the political crooks like him, what makes you think this will save the public a dime.

  4. Everyone should know doctors get “green stamps” for prescribing the most expensive drugs v. cheaper generic drugs.

    New, may not be improved, given all the problems with various new drugs and their side effects. Older drugs have been proven to be a lot safer, yet there are people who are of a mind they have to get the new branded stuff no matter the cost.

    Another annoyance of mine at age 65 and sliding toward my demise… there is no cure for old age! And doctors who do major surgeries on old people when pain meds might give them some degree of comfort and quality of life are in violation of their hippocratic oath.

    I can only hope I don’t get talked into driving up the cost of medicare by doing some idiotic surgery as I get older. We live too long and the costs of this with modern medicine that offers no quality of life but does extend it needs to be called into question.

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