Judge Approves Two National Classes in AWP Drug Litigation

BOSTON – Two major pharmaceutical companies are facing the fire this week after U.S. District Judge Patti Saris approved two national classes in theAverage Wholesale Price litigation, allowing plaintiffs to pursue litigation against AstraZeneca (NYSE: AZN) and Bristol-Myers Squibb Co. (NYSE:BMY) under unfair and deceptive trade practice laws of more than 30 states.

Already producing multiple national settlements and a bellwether bench trial, the case against the defendants claims the pharmaceutical manufacturers grossly inflated the prices of branded physician-administered drugs by misstating the Average Wholesale Price (AWP) of these drugs in industry publications.

The published AWP often sets the price that consumers, insurance companies and other third-party payors pay for the drug, and the lawsuit contends that consumers and third-party payors often paid more than market value because of the drug companies' deceptive AWP reporting.

Seattle-based Hagens Berman Sobol Shapiro, co-lead counsel in the case, announced approval of the two classes that includes the third-party payor Medigap Supplemental Insurance class (Medigap Class) and the consumer and third-party payor class for Medicare part B drugs (TPPs).

"Judge Saris' ruling is monumental and sets an important precedent - instead of a class confined to one state or jurisdiction, we can now address the problem on a national level," said Steve Berman, Hagens Berman Sobol Shapiro managing partner. "This is another huge victory for plaintiffs who long paid astronomical prices for basic chemotherapy drugs."

The first nationwide class, the Medigap Class, consists of all third-party payors who made reimbursements for drugs based on AWP for a Medicare Part B covered subject drug. The second class is composed of any consumer or third-party payors who made a payment for certain physician-administered drugs manufactured by AstraZeneca or Bristol-Myers. This also includes all third-party payors who made reimbursements based on contracts expressly using AWP as a pricing standard. The class period for both parties is Jan. 1, 1991 to Jan. 1, 2005.

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 1000 percent over the course of the outlined class period.

The defendants argue the class certification is inappropriate because application of the laws of so many jurisdictions renders trial unmanageable. However, Judge Saris states in her ruling that the Court will hold a separate trial for each defendant.

In January 2006, the court originally denied with prejudice the motion to certify these two classes under unfair and deceptive trade practices of states other than Massachusetts. Since then, the plaintiffs have provided an adequate analysis of different state statutes, convincing the court to allow certification.

According to the ruling, Saris incorporated and relied on the factual findings in other AWP cases for her most recent opinion. A bench trial held in November 2006, entered a verdict against AstraZeneca and BMS with the same classes outlined solely for the state of Massachusetts. This gave the court the opportunity to understand the complex factual and legal disputes in this difficult area of drug pricing and ultimately conclude that the case can in fact be tried on a class-wide basis.

Other settlements in the AWP case came in August of 2006 when GlaxoSmithKline agreed to a nationwide $70 million settlement and May of 2007 when AstraZeneca agreed to a $24 million settlement to Medicare Part B Zoladex users nationwide. After a trial, the court in November 2007 ordered AstraZeneca and Bristol-Myers Squibb to pay nearly $14 million to insurance companies and consumers in Massachusetts for the companies' roles in unfair trade practices.

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