Idaho will collect $1.65 million in a legal settlement with the prescription drug manufacturer Sandoz Inc. for overstating the average wholesale price of drugs, causing Idaho's Medicaid program to overpay; among others, Sandoz manufactures a generic version of the drug Prozac. The company admits no wrongdoing in the settlement but agrees to pay; Wasden has reached six similar settlements with drug manufacturers since 2005, resulting in payments of another $7 million to Idaho taxpayers. Three more average wholesale price cases, involving two dozen other drug manufacturers, still are pending. Click below to read Wasden's full announcement.

STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL
LAWRENCE WASDEN

For Immediate Release
October 18, 2010

Idaho to collect $1.65 million in drug pricing settlement

(Boise) – Prescription drug manufacturer Sandoz, Inc. has agreed to pay the State of Idaho $1.65 million in a legal settlement resolving Idaho’s claims relating to the company’s reporting of “average wholesale price,” 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 prices,” 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, the pharmaceutical product Fluoxetine, a generic version of Prozac manufactured by Sandoz, had a published average wholesale price of $2.598 in 2003, but General Wasden’s investigation revealed an actual average wholesale price of $0.217 in 2003.  This results in an 1100% 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 settlement with Sandoz, Inc. has been submitted for approval by the Fourth District Court in Ada County.  The company 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 company was willing to work with my office to reach an appropriate resolution.”

Since 2005, Wasden has resolved seven average wholesale price cases with drug manufacturers, including this settlement, resulting in approximately $8.6 million recovered for Idaho taxpayers.  Three average wholesale price cases, naming approximately 24 other drug manufacturers, are still pending.

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