Prescription drug manufacturer AstraZeneca has agreed to pay Idaho $2.5 million in a legal settlement related to overpricing drugs for the state's Medicaid program, in violation of the Idaho Consumer Protection Act. More than $620,000 of the payment will go to the state's general fund; $50,000 to the consumer protection account to cover investigative and legal costs; and $1.5 million to the state’s Cooperative Welfare Fund as a credit against the federal government’s next payment to Idaho Medicaid, of which the feds pay about 70 percent of the costs.

“This settlement provides relief to Idaho taxpayers and brings the matter to a conclusion without the need for continued litigation,” said Idaho Attorney General Lawrence Wasden.  “I appreciate that the companies were willing to work with my office to reach an appropriate resolution.” Wasden has resolved 10 such cases with drug manufacturers since 2005 and recovered more than $13 million; cases against 18 other drug manufacturers still are pending. Click below for Wasden's full announcement.

AstraZeneca spokeswoman Laura Woodin said, "AstraZeneca has competed responsibly with respect to pricing and marketing of our medicines, and we firmly believe that we have acted at all times in accordance with the law.  Although we deny liability, after years of costly litigation, we believe that this agreement was the appropriate way to resolve this matter quickly and allow the company to focus on our core mission to deliver meaningful medicines to patients."

STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL
LAWRENCE WASDEN

For Immediate Release
August 11, 2011

Wasden recovers $2.5 million in drug pricing settlement

(Boise) – Prescription drug manufacturers AstraZeneca Pharmaceuticals LP and AstraZeneca LP have agreed to pay $2.5 million in a legal settlement resolving Idaho’s claims relating to the “average wholesale prices” reported by the companies, Attorney General Lawrence Wasden said.

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.

If the manufacturer reports an inflated or false average wholesale price for a drug, taxpayers can pay too much for that drug through Medicaid reimbursements.  For example, one unit of AstraZeneca’s pharmaceutical product Prilosec had a published average wholesale price of $4.134 in 2003, but Wasden’s investigation revealed an actual average wholesale price of $3.290 in 2003.  This results in a 26% difference between the published price and the actual price.

“Where published prices are false or misleading, the taxpayers are significantly harmed by excessive Medicaid reimbursements,” Attorney General Wasden said.  “Investigation by my office has revealed that the reported average wholesale price often is not related to the actual wholesale price paid for the drug.  Misrepresenting the wholesale price is a violation of the Idaho Consumer Protection Act.”

The $2.5 million payment is intended to reimburse taxpayers for the excessive prices Idaho Medicaid paid for prescription drugs as a result of inflated average wholesale price reporting.  More than $620,000 will be deposited in the state’s General Fund to be appropriated by the legislature.  $50,000 will go to the consumer protection account to reimburse the attorney general for investigative and legal costs.  More than $1.5 million will go to the state’s Cooperative Welfare Fund and will be applied as a credit against the federal government’s next payment to Idaho Medicaid.  The federal government pays for approximately 70% of the cost of the Idaho Medicaid program.

The settlement with AstraZeneca has been approved by the Fourth District Court in Ada County.  The companies admitted no liability or wrongdoing.

“This settlement provides relief to Idaho taxpayers and brings the matter to a conclusion without the need for continued litigation,” Attorney General Wasden said.  “I appreciate that the companies were willing to work with my office to reach an appropriate resolution.”

Since 2005, Wasden has resolved 10 average wholesale price cases with drug manufacturers, including this settlement, resulting in more than $13 million recovered.  The Attorney General’s Consumer Protection Division has collected more than $32 million in settlements with pharmaceutical manufacturers since 2005, including these average wholesale price settlements.

Three average wholesale price cases, naming 18 other drug manufacturers, are still pending.

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