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Idaho recovers $28M, wins reforms in litigation over Medicaid drug pricing

Idaho Attorney General Lawrence Wasden announced today that the state has recovered more than $28 million, as a result of six years of litigation regarding overcharging by major drug manufacturers who sold prescription drugs to Idaho’s Medicaid program. Idaho has settled with 33 drug companies – three of those without litigation – and also won price disclosure concessions Wasden says will prevent such improperly inflated price reporting in future years. “In negotiating these settlements, we tried to look forward as well as backward,” Wasden said. “We recovered a significant amount of money to compensate the state for past practices. But equally as important, the state will receive pricing data from these companies going forward. That element of the settlements will help protect the taxpayers from future pricing abuses.” That data would otherwise have been confidential.

Until July 1, 2011, prescription drug prices paid by Idaho’s Medicaid program relied on companies’ reports of the “average wholesale price,” or AWP, as a basis for determining the acquisition cost to pharmacies. Wasden said, “One of them indicated that ‘AWP’ stands for ‘ain’t what’s paid.’”

While other states also have sued drug manufacturers over the issue, Wasden took a different approach, first calling all of them in for a meeting. As a result, three settlements were reached without the state even having to sue. The litigation led to reforms in how drug pricing for Medicaid is calculated, which state Health & Welfare Director Dick Armstrong said are now “saving over $10 million a year for the citizens of Idaho,” saying Idaho has now “completely changed the way drugs are priced and paid for” through its Medicaid program.

Because the federal government pays 70 percent of the costs of Medicaid in Idaho, which provides health coverage for the state’s poorest and disabled residents, the feds will get $13.56 million of the recovery, in the form of credits against future federal Medicaid payments to Idaho. The state’s share of the settlements, $7.2 million, was deposited in the state’s general fund for appropriation by the Legislature. The rest of the money went to cover the costs of the investigations and litigation; you can read my full story here at spokesman.com.

Wasden filed the first lawsuits in 2007; the first settlements were reached in 2005, 2006 and 2008, and the last one, with Novartis Pharmaceuticals Corp. for $750,000, was reached last month.

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Betsy Z. Russell covers Idaho news from The Spokesman-Review's bureau in Boise.

Named best state-based political blog in Idaho for 2013 by The Fix

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