Pharmaceutical Average Wholesale Price Litigation
Case Settled 04/30/12
Hagens Berman attorneys Steve Berman and Tom Sobol were lead counsel against 11 pharmaceutical companies, including Abbott Laboratories and Watson Pharmaceuticals, resulting in multiple settlements between 2006 and 2012. Defendants agreed to pay $125 million in a nationwide settlement for intentionally inflating reports of the average wholesale prices (AWP) on certain prescription medications.
The published AWP is used to establish the price that consumers making Medicare Part B co-payments and Medicaid pay for the drugs. The AWP also sets the prices insurance companies and other third-party payers reimburse pharmacies and doctors.
The class-action pharmaceutical fraud lawsuit asserted that the drug companies illegally inflated the prices which were then published in independent publications. The complaint alleged there was a conspiracy between the drug makers and pharmacy benefit managers who profit from the difference between the actual price for the drug and the inflated AWP sticker price.
The judge also agreed that the claim of a conspiracy among the eight drug companies regarding the ‘Together Rx’ prescription drug discount card could proceed. Medicare recipients who can’t afford other drug coverage could use the discount cards to buy drugs at a lower rate. The conspiracy alleged that the AWP for the prescription medications was inflated to more than offset the discounts given to holders of the ‘Together Rx’ cards.
A $125 million settlement was reached with Abbott Laboratories, Amgen Inc., Aventis Pharmaceuticals Inc., Hoechst Marion Roussel, Baxter Healthcare Corp., Baxter International Inc., Bayer Corporation, Dey Inc., Fujisawa Healthcare Inc., Fujisawa USA Inc., Immunex Corporation, Pharmacia Corporation, Pharmacia & Upjohn LLC, Sicor Inc., Gensia Inc., Gensia Sicor Pharmaceuticals Inc., Watson Pharmaceuticals Inc., and ZLB Behring LLC.
Drugs covered in the settlement are used to treat cancer, HIV and other serious illnesses and include Aranesp, Epogen, Neupogen, Neulasta, Anzemet, Ferrlecit and Infed. The settlement terms required that 82.5 percent of the settlement money be used for third-party payer claims and the remaining 17.5 percent used for the consumer claims. A special procedure was created to pay eligible Medicare Part B recipients.
Continued AWP Litigation
There have been additional AWP settlements.
In 2006, GlaxoSmithKline agreed to pay $70 million, and AstraZeneca agreed to pay $24 million in 2007. In 2008, Judge Saris, approved two more national classes in the continuing AWP litigation against AstraZenica and Bristol Myers Squibb for unfair and deceptive trade practice laws of more than 30 states.
The drugs in question are all prescribed to fight forms of cancer including Zoladex from AstraZeneca and Blenoxane, Taxol, Cytoxan, Robex and Vepesid from Bristol-Myers. The lawsuit claims the pharmaceutical companies inflated pricing from 27 percent to more than 1,000 percent more than the course of the outlined class period.
In 2008, the same U.S. District Judge, Judge Saris, certified another Hagens Berman AWP class-action lawsuit against McKesson Corporation on behalf of consumer purchases and third-party payers. The 2006 lawsuit brought by Hagens Berman asserted that McKesson engaged in a scheme to fraudulently inflate the price of more than 400 prescription drugs, including blockbuster drugs such as Prozac, Lipitor, Zocor, Vioxx and more.
The lawsuit further claimed that McKesson and First DataBank, a publishing company, secretly agreed to raise the AWP 20 to 25 percent for large clients such as Walgreens and Rite Aid. Part of the reason for approving the certification was that McKesson bragged that by the end of 2004 nearly 99 percent of all brand-name drugs were set at a higher price as a result of the scheme. Additionally, Hagens Berman asserted that defendants violated federal racketeering laws.
An $82 million settlement was entered in 2012. Hagens Berman is continuing to litigate AWP cases on behalf of six states concerning similar claims, including Oregon, Virginia, Utah, Montana, Mississippi and Connecticut.
Hagens Berman has been at the forefront of consumer and third-party payer litigation against various pharmaceutical companies who raise prices on drugs to obtain illegal profits. Prices charged to consumers and payers are significantly more than the cost to produce them. In many cases, Big Pharma conspires with other companies to create these false profits. Hagens Berman has helped several classes of plaintiffs obtain multimillion dollar judgments.
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