A settlement was reached with First Data Bank (FDB), publisher of the Average Wholesale Price list for pharmaceutical products. As part of the settlement, FDB will adjust the Wholesale Acquisition Cost to AWP markup on 95 percent of pharmaceuticals sold in the United States. FDB's adjusted mark-up on pharmaceutical products shall not exceed 1.20, resulting in a 4 percent price reduction in all retail drugs. U.S. drug savings are estimated to reach $4 billion in 2007 alone. Of that, $3.3 billion will go to third party payers, while approximately $400 million will go to the uninsured. FDB has also agreed to stop publishing the AWP list for pharmaceutical products after a two year notice period.
FDB was alleged to have improperly set the AWP for 95 percent of all retail drugs. The AWP list is used by health plans and state Medicaid programs in determining how much to pay pharmacies for certain drugs.
On June 7, 2007 the court gave its preliminary approval in a settlement between First Databank Inc., Medispan and the class of third party payers and consumers who purchased brand name drugs from the period 2001-2005.
The proposed settlement agreement was presented to the court in August 2006 and amended in May 2007 and states that FDB and Medispan would adjust the Wholesale Acquisition Cost to AWP mark-up on most major brand name pharmaceuticals sold in the United States. The agreement also limits the amount FDB can mark up pharmaceuticals resulting in a 4 percent price reduction in all retail drugs.
The settlement is expected to result in drug savings by purchasers of several billion dollars for both third party payers and uninsured.
- American Lawyer editorial supporting settlement
- First Circuit Settlement Decision
- Order Granting Preliminary Approval of Settlement
- Memo of Law in Support of Joint Motion
- Sobol to Judge Saris Regarding FDB Filing
- Notice of Withdrawal of Joint Motion
- Attachment A to Class Plaintiffs' Amended Memo
- Affidavit of Katherine Kinsella
- Settlement Agreement and Release
- Exhibit C to Settlement Agreement
- Exhibit D to Settlement Agreement
- Exhibit E to Settlement Agreement
- Declaration of Thomas R. Glenn
- Declaration of Thomas Sobol
- Declaration of Raymond S. Hartman
- Attachment B to Class Plaintiffs' Amended Memo
- Class Plaintiffs' and FDB's Amended Joint Motion
- Exhibit A to Settlement Agreement
- Exhibit B to Settlement Agreement
- Wall Street Journal story on FDB settlement
- Settlement Notice - Third Party Payors
- Settlement Notice - Consumers
- Aviso Legal - Espanol